Correlation Between Hertz Global and Universal
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Universal 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 Universal 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 Universal, you can compare the effects of market volatilities on Hertz Global and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Universal.
Diversification Opportunities for Hertz Global and Universal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hertz and Universal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Hertz Global i.e., Hertz Global and Universal go up and down completely randomly.
Pair Corralation between Hertz Global and Universal
Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 3.07 times more return on investment than Universal. However, Hertz Global is 3.07 times more volatile than Universal. It trades about 0.6 of its potential returns per unit of risk. Universal is currently generating about 0.35 per unit of risk. If you would invest 279.00 in Hertz Global Holdings on September 2, 2024 and sell it today you would earn a total of 213.00 from holding Hertz Global Holdings or generate 76.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Holdings vs. Universal
Performance |
| Timeline |
| Hertz Global Holdings |
| Universal |
Hertz Global and Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Universal
The main advantage of trading using opposite Hertz Global and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal's long position.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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