Correlation Between Hertz Global and Dana
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Dana 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 Hertz Global and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Holdings and Dana Inc, you can compare the effects of market volatilities on Hertz Global and Dana 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 Hertz Global with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Dana.
Diversification Opportunities for Hertz Global and Dana
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hertz and Dana is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Hertz Global 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 Hertz Global Holdings are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Hertz Global i.e., Hertz Global and Dana go up and down completely randomly.
Pair Corralation between Hertz Global and Dana
Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 1.02 times more return on investment than Dana. However, Hertz Global is 1.02 times more volatile than Dana Inc. It trades about 0.37 of its potential returns per unit of risk. Dana Inc is currently generating about -0.04 per unit of risk. If you would invest 306.00 in Hertz Global Holdings on August 29, 2024 and sell it today you would earn a total of 160.00 from holding Hertz Global Holdings or generate 52.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Holdings vs. Dana Inc
Performance |
| Timeline |
| Hertz Global Holdings |
| Dana Inc |
Hertz Global and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Dana
The main advantage of trading using opposite Hertz Global and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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