Correlation Between Herc Holdings and Apple
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and Apple at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Herc Holdings and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Apple Inc, you can compare the effects of market volatilities on Herc Holdings and Apple and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Herc Holdings with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Apple.
Diversification Opportunities for Herc Holdings and Apple
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herc and Apple is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Herc Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Herc Holdings are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Herc Holdings i.e., Herc Holdings and Apple go up and down completely randomly.
Pair Corralation between Herc Holdings and Apple
Assuming the 90 days trading horizon Herc Holdings is expected to generate 2.39 times more return on investment than Apple. However, Herc Holdings is 2.39 times more volatile than Apple Inc. It trades about 0.22 of its potential returns per unit of risk. Apple Inc is currently generating about 0.39 per unit of risk. If you would invest 19,200 in Herc Holdings on September 2, 2024 and sell it today you would earn a total of 2,400 from holding Herc Holdings or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Apple Inc
Performance |
| Timeline |
| Herc Holdings |
| Apple Inc |
Herc Holdings and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Apple
The main advantage of trading using opposite Herc Holdings and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, Apple can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Apple will offset losses from the drop in Apple's long position.| Herc Holdings vs. Apple Inc | Herc Holdings vs. Apple Inc | Herc Holdings vs. Apple Inc | Herc Holdings vs. Apple Inc |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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