Correlation Between Herc Holdings and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and Rivian Automotive 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 Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Rivian Automotive, you can compare the effects of market volatilities on Herc Holdings and Rivian Automotive 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 Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Rivian Automotive.
Diversification Opportunities for Herc Holdings and Rivian Automotive
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Herc and Rivian is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive 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 Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Herc Holdings i.e., Herc Holdings and Rivian Automotive go up and down completely randomly.
Pair Corralation between Herc Holdings and Rivian Automotive
Considering the 90-day investment horizon Herc Holdings is expected to generate 1.03 times less return on investment than Rivian Automotive. But when comparing it to its historical volatility, Herc Holdings is 1.84 times less risky than Rivian Automotive. It trades about 0.07 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,016 in Rivian Automotive on August 24, 2024 and sell it today you would earn a total of 18.00 from holding Rivian Automotive or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Rivian Automotive
Performance |
| Timeline |
| Herc Holdings |
| Rivian Automotive |
Herc Holdings and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Rivian Automotive
The main advantage of trading using opposite Herc Holdings and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, Rivian Automotive 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 Rivian Automotive will offset losses from the drop in Rivian Automotive'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 |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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