Correlation Between Herc Holdings and 191216CQ1

Can any of the company-specific risk be diversified away by investing in both Herc Holdings and 191216CQ1 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 191216CQ1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Herc Holdings and US191216CQ13, you can compare the effects of market volatilities on Herc Holdings and 191216CQ1 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 191216CQ1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and 191216CQ1.

Diversification Opportunities for Herc Holdings and 191216CQ1

0.03

Correlation Coefficient

Herc Holdings  191216CQ1

Significant diversification

The 3 months correlation between Herc and 191216CQ1 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and US191216CQ13 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US191216CQ13 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 191216CQ1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US191216CQ13 has no effect on the direction of Herc Holdings i.e., Herc Holdings and 191216CQ1 go up and down completely randomly.

Pair Corralation between Herc Holdings and 191216CQ1

Considering the 90-day investment horizon Herc Holdings is expected to under-perform the 191216CQ1. In addition to that, Herc Holdings is 2.11 times more volatile than US191216CQ13. It trades about -0.15 of its total potential returns per unit of risk. US191216CQ13 is currently generating about 0.16 per unit of volatility. If you would invest  8,253  in US191216CQ13 on December 22, 2024 and sell it today you would earn a total of  878.00  from holding US191216CQ13 or generate 10.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

Herc Holdings  vs.  US191216CQ13

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.

US191216CQ13

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US191216CQ13 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 191216CQ1 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Herc Holdings and 191216CQ1

The main advantage of trading using opposite Herc Holdings and 191216CQ1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings position performs unexpectedly, 191216CQ1 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 191216CQ1 will offset losses from the drop in 191216CQ1's long position.

The idea behind Herc Holdings and US191216CQ13 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.