Correlation Between Hertz Global and Hertz Global

Can any of the company-specific risk be diversified away by investing in both Hertz Global 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 Hertz Global and Hertz Global 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 Hertz Global Holdings, you can compare the effects of market volatilities on Hertz Global 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 Hertz Global with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Hertz Global.

Diversification Opportunities for Hertz Global and Hertz Global

0.99

Correlation Coefficient

Hertz Global  Hertz Global

No risk reduction

The 3 months correlation between Hertz and Hertz is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs 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 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 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 Hertz Global i.e., Hertz Global and Hertz Global go up and down completely randomly.

Pair Corralation between Hertz Global and Hertz Global

Assuming the 90 days horizon Hertz Global Hldgs is expected to generate 0.85 times more return on investment than Hertz Global. However, Hertz Global Hldgs is 1.17 times less risky than Hertz Global. It trades about -0.15 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.14 per unit of risk. If you would invest  449.00  in Hertz Global Hldgs on March 1, 2024 and sell it today you would lose (169.00) from holding Hertz Global Hldgs or give up 37.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Hertz Global Hldgs  vs.  Hertz Global Holdings

Hertz Global Hldgs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hertz Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hertz Global and Hertz Global

The main advantage of trading using opposite Hertz Global and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global 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 Hertz Global Hldgs 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.