Correlation Between Hertz Global and FormFactor
Can any of the company-specific risk be diversified away by investing in both Hertz Global and FormFactor 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 FormFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Hldgs and FormFactor, you can compare the effects of market volatilities on Hertz Global and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and FormFactor.
Diversification Opportunities for Hertz Global and FormFactor
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hertz and FormFactor is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 Hldgs are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Hertz Global i.e., Hertz Global and FormFactor go up and down completely randomly.
Pair Corralation between Hertz Global and FormFactor
Assuming the 90 days horizon Hertz Global Hldgs is expected to generate 1.2 times more return on investment than FormFactor. However, Hertz Global is 1.2 times more volatile than FormFactor. It trades about 0.19 of its potential returns per unit of risk. FormFactor is currently generating about -0.16 per unit of risk. If you would invest 210.00 in Hertz Global Hldgs on November 2, 2024 and sell it today you would earn a total of 27.00 from holding Hertz Global Hldgs or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Hldgs vs. FormFactor
Performance |
| Timeline |
| Hertz Global Hldgs |
| FormFactor |
Hertz Global and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and FormFactor
The main advantage of trading using opposite Hertz Global and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| Hertz Global vs. Hertz Global Holdings | Hertz Global vs. Avis Budget Group | Hertz Global vs. Herc Holdings | Hertz Global vs. Frontier Group Holdings |
| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor vs. Amkor Technology |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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