Correlation Between Hertz Global and PROG Holdings

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

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

Diversification Opportunities for Hertz Global and PROG Holdings

0.49

Correlation Coefficient

Hertz Global  PROG Holdings

Very weak diversification

The 3 months correlation between Hertz and PROG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings 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 Hldgs are associated (or correlated) with PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Hertz Global i.e., Hertz Global and PROG Holdings go up and down completely randomly.

Pair Corralation between Hertz Global and PROG Holdings

Assuming the 90 days horizon Hertz Global is expected to generate 1.09 times less return on investment than PROG Holdings. In addition to that, Hertz Global is 1.6 times more volatile than PROG Holdings. It trades about 0.05 of its total potential returns per unit of risk. PROG Holdings is currently generating about 0.09 per unit of volatility. If you would invest  3,675  in PROG Holdings on September 3, 2024 and sell it today you would earn a total of  1,191  from holding PROG Holdings or generate 32.41% return on investment over 90 days.

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

Hertz Global Hldgs  vs.  PROG Holdings

Hertz Global Hldgs

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 10 (%) 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.

PROG Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, PROG Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hertz Global and PROG Holdings

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

The idea behind Hertz Global Hldgs and PROG 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.