Correlation Between Hooker Furniture and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Hertz Global 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 Hooker Furniture and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Hertz Global Holdings, you can compare the effects of market volatilities on Hooker Furniture and Hertz Global 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 Hooker Furniture with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Hertz Global.
Diversification Opportunities for Hooker Furniture and Hertz Global
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Hertz is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Hertz Global go up and down completely randomly.
Pair Corralation between Hooker Furniture and Hertz Global
Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Hooker Furniture is 1.45 times less risky than Hertz Global. The stock trades about -0.09 of its potential returns per unit of risk. The Hertz Global Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 411.00 in Hertz Global Holdings on September 15, 2024 and sell it today you would earn a total of 17.00 from holding Hertz Global Holdings or generate 4.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hooker Furniture vs. Hertz Global Holdings
Performance |
Timeline |
Hooker Furniture |
Hertz Global Holdings |
Hooker Furniture and Hertz Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hooker Furniture and Hertz Global
The main advantage of trading using opposite Hooker Furniture and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global's long position.Hooker Furniture vs. Natuzzi SpA | ||
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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