Correlation Between Hertz Global and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Valeura Energy 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 Valeura Energy 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 Valeura Energy, you can compare the effects of market volatilities on Hertz Global and Valeura Energy 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 Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Valeura Energy.
Diversification Opportunities for Hertz Global and Valeura Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hertz and Valeura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Hertz Global i.e., Hertz Global and Valeura Energy go up and down completely randomly.
Pair Corralation between Hertz Global and Valeura Energy
Considering the 90-day investment horizon Hertz Global is expected to generate 1.16 times less return on investment than Valeura Energy. In addition to that, Hertz Global is 1.4 times more volatile than Valeura Energy. It trades about 0.16 of its total potential returns per unit of risk. Valeura Energy is currently generating about 0.25 per unit of volatility. If you would invest 391.00 in Valeura Energy on September 13, 2024 and sell it today you would earn a total of 76.00 from holding Valeura Energy or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hertz Global Holdings vs. Valeura Energy
Performance |
| Timeline |
| Hertz Global Holdings |
| Valeura Energy |
Hertz Global and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Valeura Energy
The main advantage of trading using opposite Hertz Global and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Valeura Energy 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 Valeura Energy will offset losses from the drop in Valeura Energy's long position.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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