Correlation Between Herc Holdings and INTEL

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

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

Diversification Opportunities for Herc Holdings and INTEL

0.72

Correlation Coefficient

Herc Holdings  INTEL

Poor diversification

The 3 months correlation between Herc and INTEL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION 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 INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of Herc Holdings i.e., Herc Holdings and INTEL go up and down completely randomly.

Pair Corralation between Herc Holdings and INTEL

Considering the 90-day investment horizon Herc Holdings is expected to generate 35.61 times less return on investment than INTEL. But when comparing it to its historical volatility, Herc Holdings is 22.44 times less risky than INTEL. It trades about 0.04 of its potential returns per unit of risk. INTEL PORATION is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,223  in INTEL PORATION on October 25, 2024 and sell it today you would lose (1,409) from holding INTEL PORATION or give up 15.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.99%
Values	Daily Returns

Herc Holdings  vs.  INTEL PORATION

Herc Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herc Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Herc Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

INTEL PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTEL PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTEL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Herc Holdings and INTEL

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

The idea behind Herc Holdings and INTEL PORATION 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.