Correlation Between Hertz Global and Mosaic

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

Diversification Opportunities for Hertz Global and Mosaic

-0.16

Correlation Coefficient

Hertz Global  Mosaic

Good diversification

The 3 months correlation between Hertz and Mosaic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Hertz Global i.e., Hertz Global and Mosaic go up and down completely randomly.

Pair Corralation between Hertz Global and Mosaic

Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the Mosaic. In addition to that, Hertz Global is 2.1 times more volatile than The Mosaic. It trades about -0.08 of its total potential returns per unit of risk. The Mosaic is currently generating about -0.1 per unit of volatility. If you would invest  2,524  in The Mosaic on September 21, 2024 and sell it today you would lose (136.00) from holding The Mosaic or give up 5.39% of portfolio value over 90 days.

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

Hertz Global Holdings  vs.  The Mosaic

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.

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hertz Global and Mosaic

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

The idea behind Hertz Global Holdings and The Mosaic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.