Correlation Between FlexShopper and Herc Holdings

Can any of the company-specific risk be diversified away by investing in both FlexShopper 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 FlexShopper and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FlexShopper and Herc Holdings, you can compare the effects of market volatilities on FlexShopper 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 FlexShopper with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShopper and Herc Holdings.

Diversification Opportunities for FlexShopper and Herc Holdings

0.18

Correlation Coefficient

FlexShopper  Herc Holdings

Average diversification

The 3 months correlation between FlexShopper and Herc is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding FlexShopper and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and FlexShopper 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 FlexShopper 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 FlexShopper i.e., FlexShopper and Herc Holdings go up and down completely randomly.

Pair Corralation between FlexShopper and Herc Holdings

Given the investment horizon of 90 days FlexShopper is expected to under-perform the Herc Holdings. In addition to that, FlexShopper is 3.36 times more volatile than Herc Holdings. It trades about -0.08 of its total potential returns per unit of risk. Herc Holdings is currently generating about -0.19 per unit of volatility. If you would invest  16,578  in Herc Holdings on January 24, 2024 and sell it today you would lose (1,228) from holding Herc Holdings or give up 7.41% of portfolio value over 90 days.

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

FlexShopper  vs.  Herc Holdings

FlexShopper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, FlexShopper is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Herc Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Herc Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Herc Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FlexShopper and Herc Holdings

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

The idea behind FlexShopper and Herc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..