Correlation Between Mamas Creations and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Mamas Creations and Herc Holdings 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 Mamas Creations and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mamas Creations and Herc Holdings, you can compare the effects of market volatilities on Mamas Creations and Herc Holdings 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 Mamas Creations with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mamas Creations and Herc Holdings.
Diversification Opportunities for Mamas Creations and Herc Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mamas and Herc is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mamas Creations and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and Mamas Creations 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 Mamas Creations are associated (or correlated) with Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Mamas Creations i.e., Mamas Creations and Herc Holdings go up and down completely randomly.
Pair Corralation between Mamas Creations and Herc Holdings
Given the investment horizon of 90 days Mamas Creations is expected to generate 1.1 times more return on investment than Herc Holdings. However, Mamas Creations is 1.1 times more volatile than Herc Holdings. It trades about -0.27 of its potential returns per unit of risk. Herc Holdings is currently generating about -0.46 per unit of risk. If you would invest 770.00 in Mamas Creations on December 2, 2024 and sell it today you would lose (158.00) from holding Mamas Creations or give up 20.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mamas Creations vs. Herc Holdings
Performance |
| Timeline |
| Mamas Creations |
| Herc Holdings |
Mamas Creations and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mamas Creations and Herc Holdings
The main advantage of trading using opposite Mamas Creations and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mamas Creations position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Mamas Creations vs. Regeneron Pharmaceuticals | ||
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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