Correlation Between GATX and Hertz Global

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

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

Diversification Opportunities for GATX and Hertz Global

0.66

Correlation Coefficient

GATX  Hertz Global

Poor diversification

The 3 months correlation between GATX and Hertz is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs and GATX 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 GATX Corporation 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 Hldgs has no effect on the direction of GATX i.e., GATX and Hertz Global go up and down completely randomly.

Pair Corralation between GATX and Hertz Global

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.38 times more return on investment than Hertz Global. However, GATX Corporation is 2.64 times less risky than Hertz Global. It trades about 0.06 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.05 per unit of risk. If you would invest  10,632  in GATX Corporation on September 29, 2024 and sell it today you would earn a total of  4,911  from holding GATX Corporation or generate 46.19% return on investment over 90 days.

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

GATX Corp.  vs.  Hertz Global Hldgs

GATX

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, GATX showed solid returns over the last few months and may actually be approaching a breakup point.

Hertz Global Hldgs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hertz Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GATX and Hertz Global

The main advantage of trading using opposite GATX and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX 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 GATX Corporation and Hertz Global Hldgs 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.