Correlation Between Hertz Global and Frontier Group
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Frontier 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 Hertz Global and Frontier Group 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 Frontier Group Holdings, you can compare the effects of market volatilities on Hertz Global and Frontier 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 Hertz Global with a short position of Frontier Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Frontier Group.
Diversification Opportunities for Hertz Global and Frontier Group
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hertz and Frontier is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Frontier Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Group Holdings 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 Frontier Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Group Holdings has no effect on the direction of Hertz Global i.e., Hertz Global and Frontier Group go up and down completely randomly.
Pair Corralation between Hertz Global and Frontier Group
Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 0.98 times more return on investment than Frontier Group. However, Hertz Global Holdings is 1.02 times less risky than Frontier Group. It trades about 0.39 of its potential returns per unit of risk. Frontier Group Holdings is currently generating about -0.05 per unit of risk. If you would invest 305.00 in Hertz Global Holdings on August 31, 2024 and sell it today you would earn a total of 157.00 from holding Hertz Global Holdings or generate 51.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Holdings vs. Frontier Group Holdings
Performance |
| Timeline |
| Hertz Global Holdings |
| Frontier Group Holdings |
Hertz Global and Frontier Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Frontier Group
The main advantage of trading using opposite Hertz Global and Frontier Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Frontier 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 Frontier Group will offset losses from the drop in Frontier Group's long position.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Air Lease |
| Frontier Group vs. JetBlue Airways Corp | Frontier Group vs. Southwest Airlines | Frontier Group vs. United Airlines Holdings | Frontier Group vs. American Airlines Group |
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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