Correlation Between Hertz Global and Hawkins

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

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

Diversification Opportunities for Hertz Global and Hawkins

0.69

Correlation Coefficient

Hertz Global  Hawkins

Poor diversification

The 3 months correlation between Hertz and Hawkins is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Holdings are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Hertz Global i.e., Hertz Global and Hawkins go up and down completely randomly.

Pair Corralation between Hertz Global and Hawkins

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 1.75 times more return on investment than Hawkins. However, Hertz Global is 1.75 times more volatile than Hawkins. It trades about 0.01 of its potential returns per unit of risk. Hawkins is currently generating about 0.01 per unit of risk. 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	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hertz Global Holdings  vs.  Hawkins

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.

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hertz Global and Hawkins

The main advantage of trading using opposite Hertz Global and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.

The idea behind Hertz Global Holdings and Hawkins 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.