Correlation Between Hertz Global and 31620MBY1

Can any of the company-specific risk be diversified away by investing in both Hertz Global and 31620MBY1 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 31620MBY1 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 FIS 51 15 JUL 32, you can compare the effects of market volatilities on Hertz Global and 31620MBY1 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 31620MBY1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and 31620MBY1.

Diversification Opportunities for Hertz Global and 31620MBY1

-0.55

Correlation Coefficient

Hertz Global  31620MBY1

Excellent diversification

The 3 months correlation between Hertz and 31620MBY1 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and FIS 51 15 JUL 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIS 51 15 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 31620MBY1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIS 51 15 has no effect on the direction of Hertz Global i.e., Hertz Global and 31620MBY1 go up and down completely randomly.

Pair Corralation between Hertz Global and 31620MBY1

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 4.57 times more return on investment than 31620MBY1. However, Hertz Global is 4.57 times more volatile than FIS 51 15 JUL 32. It trades about 0.19 of its potential returns per unit of risk. FIS 51 15 JUL 32 is currently generating about -0.13 per unit of risk. If you would invest  273.00  in Hertz Global Holdings on September 12, 2024 and sell it today you would earn a total of  179.00  from holding Hertz Global Holdings or generate 65.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Hertz Global Holdings  vs.  FIS 51 15 JUL 32

Hertz Global Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

FIS 51 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIS 51 15 JUL 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FIS 51 15 JUL 32 investors.

Pair Trading with Hertz Global and 31620MBY1

The main advantage of trading using opposite Hertz Global and 31620MBY1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, 31620MBY1 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 31620MBY1 will offset losses from the drop in 31620MBY1's long position.

The idea behind Hertz Global Holdings and FIS 51 15 JUL 32 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.