Correlation Between Global Ship and Hertz Global

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

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

Diversification Opportunities for Global Ship and Hertz Global

0.0

Correlation Coefficient

Global Ship  Hertz Global

Pay attention - limited upside

The 3 months correlation between Global and Hertz is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease 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 Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Hertz Global go up and down completely randomly.

Pair Corralation between Global Ship and Hertz Global

Assuming the 90 days trading horizon Global Ship is expected to generate 1.06 times less return on investment than Hertz Global. But when comparing it to its historical volatility, Global Ship Lease is 7.04 times less risky than Hertz Global. It trades about 0.09 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Hertz Global Holdings on September 21, 2024 and sell it today you would lose (9.00) from holding Hertz Global Holdings or give up 2.68% of portfolio value over 90 days.

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

Global Ship Lease  vs.  Hertz Global Holdings

Global Ship Lease

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hertz Global Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hertz Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Ship and Hertz Global

The main advantage of trading using opposite Global Ship and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.