Correlation Between Herc Holdings and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and CenterPoint Energy 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 CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and CenterPoint Energy, you can compare the effects of market volatilities on Herc Holdings and CenterPoint Energy 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and CenterPoint Energy.
Diversification Opportunities for Herc Holdings and CenterPoint Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herc and CenterPoint is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Herc Holdings i.e., Herc Holdings and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Herc Holdings and CenterPoint Energy
Considering the 90-day investment horizon Herc Holdings is expected to generate 1.72 times less return on investment than CenterPoint Energy. In addition to that, Herc Holdings is 1.91 times more volatile than CenterPoint Energy. It trades about 0.07 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.24 per unit of volatility. If you would invest 2,955 in CenterPoint Energy on August 27, 2024 and sell it today you would earn a total of 238.00 from holding CenterPoint Energy or generate 8.05% 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. CenterPoint Energy
Performance |
| Timeline |
| Herc Holdings |
| CenterPoint Energy |
Herc Holdings and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and CenterPoint Energy
The main advantage of trading using opposite Herc Holdings and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy'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 |
| CenterPoint Energy vs. Entergy | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Pinnacle West Capital |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |