Correlation Between Pekin Life and Hertz Global

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

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

Diversification Opportunities for Pekin Life and Hertz Global

0.77

Correlation Coefficient

Pekin Life  Hertz Global

Poor diversification

The 3 months correlation between Pekin and Hertz is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of Pekin Life i.e., Pekin Life and Hertz Global go up and down completely randomly.

Pair Corralation between Pekin Life and Hertz Global

Given the investment horizon of 90 days Pekin Life Insurance is not expected to generate positive returns. However, Pekin Life Insurance is 143.54 times less risky than Hertz Global. It waists most of its returns potential to compensate for thr risk taken. Hertz Global is generating about -0.35 per unit of risk. If you would invest  1,175  in Pekin Life Insurance on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Pekin Life Insurance or generate 0.0% return on investment over 90 days.

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

Pekin Life Insurance  vs.  Hertz Global Holdings

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hertz Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hertz Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pekin Life and Hertz Global

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

The idea behind Pekin Life Insurance and Hertz Global 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.