Correlation Between Weyco and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Weyco 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 Weyco and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Hertz Global Holdings, you can compare the effects of market volatilities on Weyco 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 Weyco with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Hertz Global.
Diversification Opportunities for Weyco and Hertz Global
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weyco and Hertz is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group 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 Weyco 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 Weyco Group 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 Weyco i.e., Weyco and Hertz Global go up and down completely randomly.
Pair Corralation between Weyco and Hertz Global
Given the investment horizon of 90 days Weyco is expected to generate 3.68 times less return on investment than Hertz Global. But when comparing it to its historical volatility, Weyco Group is 1.61 times less risky than Hertz Global. It trades about 0.06 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Hertz Global Holdings on August 29, 2024 and sell it today you would earn a total of 132.00 from holding Hertz Global Holdings or generate 41.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Hertz Global Holdings
Performance |
| Timeline |
| Weyco Group |
| Hertz Global Holdings |
Weyco and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Hertz Global
The main advantage of trading using opposite Weyco and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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.The idea behind Weyco Group and Hertz Global Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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