Correlation Between Solution Financial and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Solution Financial 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 Solution Financial and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and Hertz Global Holdings, you can compare the effects of market volatilities on Solution Financial 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 Solution Financial with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and Hertz Global.
Diversification Opportunities for Solution Financial and Hertz Global
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solution and Hertz is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings and Solution Financial 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 Solution Financial 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 Holdings has no effect on the direction of Solution Financial i.e., Solution Financial and Hertz Global go up and down completely randomly.
Pair Corralation between Solution Financial and Hertz Global
Assuming the 90 days horizon Solution Financial is expected to generate 0.87 times more return on investment than Hertz Global. However, Solution Financial is 1.15 times less risky than Hertz Global. It trades about 0.01 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.04 per unit of risk. If you would invest 24.00 in Solution Financial on August 30, 2024 and sell it today you would lose (4.00) from holding Solution Financial or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Financial vs. Hertz Global Holdings
Performance |
| Timeline |
| Solution Financial |
| Hertz Global Holdings |
Solution Financial and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and Hertz Global
The main advantage of trading using opposite Solution Financial and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial 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.| Solution Financial vs. United Rentals | Solution Financial vs. Ashtead Group plc | Solution Financial vs. AerCap Holdings NV | Solution Financial vs. Fortress Transp Infra |
| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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