Correlation Between NVIDIA and Hertz Global
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Hertz Global 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 NVIDIA and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Hertz Global Hldgs, you can compare the effects of market volatilities on NVIDIA and Hertz Global 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 NVIDIA with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Hertz Global.
Diversification Opportunities for NVIDIA and Hertz Global
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Hertz is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs and NVIDIA 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 NVIDIA are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of NVIDIA i.e., NVIDIA and Hertz Global go up and down completely randomly.
Pair Corralation between NVIDIA and Hertz Global
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.79 times less risky than Hertz Global. The stock trades about -0.05 of its potential returns per unit of risk. The Hertz Global Hldgs is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Hertz Global Hldgs on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Hertz Global Hldgs or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Hertz Global Hldgs
Performance |
| Timeline |
| NVIDIA |
| Hertz Global Hldgs |
NVIDIA and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Hertz Global
The main advantage of trading using opposite NVIDIA and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Hertz Global vs. Hertz Global Holdings | Hertz Global vs. Avis Budget Group | Hertz Global vs. Herc Holdings | Hertz Global vs. Frontier Group Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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