Correlation Between Herc Holdings and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Herc Holdings 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 Herc Holdings and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Hertz Global Hldgs, you can compare the effects of market volatilities on Herc Holdings 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 Herc Holdings with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Hertz Global.
Diversification Opportunities for Herc Holdings and Hertz Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Herc and Hertz is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 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 Hldgs has no effect on the direction of Herc Holdings i.e., Herc Holdings and Hertz Global go up and down completely randomly.
Pair Corralation between Herc Holdings and Hertz Global
Considering the 90-day investment horizon Herc Holdings is expected to generate 3.44 times less return on investment than Hertz Global. But when comparing it to its historical volatility, Herc Holdings is 1.27 times less risky than Hertz Global. It trades about 0.07 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Hertz Global Hldgs on August 24, 2024 and sell it today you would earn a total of 30.00 from holding Hertz Global Hldgs or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Hertz Global Hldgs
Performance |
| Timeline |
| Herc Holdings |
| Hertz Global Hldgs |
Herc Holdings and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Hertz Global
The main advantage of trading using opposite Herc Holdings and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings 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.| Herc Holdings vs. HE Equipment Services | Herc Holdings vs. Air Lease | Herc Holdings vs. Aquagold International | Herc Holdings vs. Small Cap Core |
| Hertz Global vs. Hertz Global Holdings | Hertz Global vs. Avis Budget Group | Hertz Global vs. Herc Holdings | Hertz Global vs. Frontier Group Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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