Correlation Between Hertz Global and Rocky Brands

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

Diversification Opportunities for Hertz Global and Rocky Brands

-0.5

Correlation Coefficient

Hertz Global  Rocky Brands

Very good diversification

The 3 months correlation between Hertz and Rocky is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands 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 Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of Hertz Global i.e., Hertz Global and Rocky Brands go up and down completely randomly.

Pair Corralation between Hertz Global and Rocky Brands

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 1.15 times more return on investment than Rocky Brands. However, Hertz Global is 1.15 times more volatile than Rocky Brands. It trades about 0.04 of its potential returns per unit of risk. Rocky Brands is currently generating about -0.08 per unit of risk. If you would invest  366.00  in Hertz Global Holdings on September 17, 2024 and sell it today you would earn a total of  15.50  from holding Hertz Global Holdings or generate 4.23% return on investment over 90 days.

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

Hertz Global Holdings  vs.  Rocky Brands

Hertz Global Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rocky Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hertz Global and Rocky Brands

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

The idea behind Hertz Global Holdings and Rocky Brands 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.