Correlation Between Herc Holdings and Air Lease
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Air Lease, you can compare the effects of market volatilities on Herc Holdings and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Air Lease.
Diversification Opportunities for Herc Holdings and Air Lease
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herc and Air is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Herc Holdings i.e., Herc Holdings and Air Lease go up and down completely randomly.
Pair Corralation between Herc Holdings and Air Lease
Considering the 90-day investment horizon Herc Holdings is expected to generate 2.23 times more return on investment than Air Lease. However, Herc Holdings is 2.23 times more volatile than Air Lease. It trades about 0.24 of its potential returns per unit of risk. Air Lease is currently generating about 0.18 per unit of risk. If you would invest 15,707 in Herc Holdings on August 26, 2024 and sell it today you would earn a total of 6,585 from holding Herc Holdings or generate 41.92% 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. Air Lease
Performance |
| Timeline |
| Herc Holdings |
| Air Lease |
Herc Holdings and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Air Lease
The main advantage of trading using opposite Herc Holdings and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Herc Holdings vs. PROG Holdings | Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Mega Matrix Corp | Herc Holdings vs. FTAI Aviation Ltd |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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