Correlation Between Hertz Global and Black Diamond

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

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

Diversification Opportunities for Hertz Global and Black Diamond

-0.44

Correlation Coefficient

Hertz Global  Black Diamond

Very good diversification

The 3 months correlation between Hertz and Black is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Black Diamond Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Group and Hertz Global 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 Hertz Global Holdings are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Group has no effect on the direction of Hertz Global i.e., Hertz Global and Black Diamond go up and down completely randomly.

Pair Corralation between Hertz Global and Black Diamond

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 2.95 times more return on investment than Black Diamond. However, Hertz Global is 2.95 times more volatile than Black Diamond Group. It trades about 0.18 of its potential returns per unit of risk. Black Diamond Group is currently generating about -0.15 per unit of risk. If you would invest  299.00  in Hertz Global Holdings on September 3, 2024 and sell it today you would earn a total of  193.00  from holding Hertz Global Holdings or generate 64.55% return on investment over 90 days.

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

Hertz Global Holdings  vs.  Black Diamond Group

Hertz Global Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Black Diamond Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hertz Global and Black Diamond

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

The idea behind Hertz Global Holdings and Black Diamond Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.