Correlation Between Herc Holdings and TKO Group
Can any of the company-specific risk be diversified away by investing in both Herc Holdings and TKO Group 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 TKO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and TKO Group Holdings,, you can compare the effects of market volatilities on Herc Holdings and TKO Group 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 TKO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and TKO Group.
Diversification Opportunities for Herc Holdings and TKO Group
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Herc and TKO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Herc Holdings i.e., Herc Holdings and TKO Group go up and down completely randomly.
Pair Corralation between Herc Holdings and TKO Group
Considering the 90-day investment horizon Herc Holdings is expected to under-perform the TKO Group. But the stock apears to be less risky and, when comparing its historical volatility, Herc Holdings is 1.01 times less risky than TKO Group. The stock trades about -0.14 of its potential returns per unit of risk. The TKO Group Holdings, is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 11,780 in TKO Group Holdings, on September 14, 2024 and sell it today you would earn a total of 2,563 from holding TKO Group Holdings, or generate 21.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. TKO Group Holdings,
Performance |
| Timeline |
| Herc Holdings |
| TKO Group Holdings, |
Herc Holdings and TKO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and TKO Group
The main advantage of trading using opposite Herc Holdings and TKO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, TKO Group 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 TKO Group will offset losses from the drop in TKO Group'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 |
| TKO Group vs. Ambev SA ADR | TKO Group vs. Willscot Mobile Mini | TKO Group vs. Westrock Coffee | TKO Group vs. Herc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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