Correlation Between Hertz Global and Lipocine
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Lipocine 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 Lipocine 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 Lipocine, you can compare the effects of market volatilities on Hertz Global and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Lipocine.
Diversification Opportunities for Hertz Global and Lipocine
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hertz and Lipocine is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Hertz Global i.e., Hertz Global and Lipocine go up and down completely randomly.
Pair Corralation between Hertz Global and Lipocine
Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Holdings is 1.36 times less risky than Lipocine. The stock trades about -0.06 of its potential returns per unit of risk. The Lipocine is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 917.00 in Lipocine on August 27, 2024 and sell it today you would lose (402.00) from holding Lipocine or give up 43.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Holdings vs. Lipocine
Performance |
| Timeline |
| Hertz Global Holdings |
| Lipocine |
Hertz Global and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Lipocine
The main advantage of trading using opposite Hertz Global and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
| Lipocine vs. Capricor Therapeutics | Lipocine vs. Soleno Therapeutics | Lipocine vs. Bio Path Holdings | Lipocine vs. Moleculin Biotech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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