Correlation Between Hertz Global and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Hertz Global and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Hertz Global and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Kaiser Aluminum.
Diversification Opportunities for Hertz Global and Kaiser Aluminum
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hertz and Kaiser is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Hertz Global i.e., Hertz Global and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Hertz Global and Kaiser Aluminum
Assuming the 90 days horizon Hertz Global Hldgs is expected to generate 2.19 times more return on investment than Kaiser Aluminum. However, Hertz Global is 2.19 times more volatile than Kaiser Aluminum. It trades about 0.13 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.04 per unit of risk. If you would invest 181.00 in Hertz Global Hldgs on November 1, 2024 and sell it today you would earn a total of 59.00 from holding Hertz Global Hldgs or generate 32.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Hldgs vs. Kaiser Aluminum
Performance |
| Timeline |
| Hertz Global Hldgs |
| Kaiser Aluminum |
Hertz Global and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Kaiser Aluminum
The main advantage of trading using opposite Hertz Global and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum'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 |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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