Correlation Between Herc Holdings and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and Freedom Holding 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 Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Freedom Holding Corp, you can compare the effects of market volatilities on Herc Holdings and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Freedom Holding.
Diversification Opportunities for Herc Holdings and Freedom Holding
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Herc and Freedom is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Herc Holdings i.e., Herc Holdings and Freedom Holding go up and down completely randomly.
Pair Corralation between Herc Holdings and Freedom Holding
Considering the 90-day investment horizon Herc Holdings is expected to generate 1.06 times less return on investment than Freedom Holding. In addition to that, Herc Holdings is 1.6 times more volatile than Freedom Holding Corp. It trades about 0.17 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.29 per unit of volatility. If you would invest 10,646 in Freedom Holding Corp on September 2, 2024 and sell it today you would earn a total of 1,242 from holding Freedom Holding Corp or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Freedom Holding Corp
Performance |
| Timeline |
| Herc Holdings |
| Freedom Holding Corp |
Herc Holdings and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Freedom Holding
The main advantage of trading using opposite Herc Holdings and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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