Correlation Between Herc Holdings and Assurant

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

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

Diversification Opportunities for Herc Holdings and Assurant

0.4

Correlation Coefficient

Herc Holdings  Assurant

Very weak diversification

The 3 months correlation between Herc and Assurant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Herc Holdings 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 Herc Holdings are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Herc Holdings i.e., Herc Holdings and Assurant go up and down completely randomly.

Pair Corralation between Herc Holdings and Assurant

Considering the 90-day investment horizon Herc Holdings is expected to under-perform the Assurant. In addition to that, Herc Holdings is 2.4 times more volatile than Assurant. It trades about -0.17 of its total potential returns per unit of risk. Assurant is currently generating about 0.02 per unit of volatility. If you would invest  21,061  in Assurant on December 21, 2024 and sell it today you would earn a total of  144.00  from holding Assurant or generate 0.68% return on investment over 90 days.

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

Herc Holdings  vs.  Assurant

Herc Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herc Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Assurant

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Assurant is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Herc Holdings and Assurant

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

The idea behind Herc Holdings and Assurant 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.