Correlation Between Hertz Global and HyreCar

Can any of the company-specific risk be diversified away by investing in both Hertz Global and HyreCar 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 HyreCar 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 HyreCar, you can compare the effects of market volatilities on Hertz Global and HyreCar 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 HyreCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and HyreCar.

Diversification Opportunities for Hertz Global and HyreCar

-0.32

Correlation Coefficient

Hertz Global  HyreCar

Very good diversification

The 3 months correlation between Hertz and HyreCar is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and HyreCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyreCar 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 HyreCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyreCar has no effect on the direction of Hertz Global i.e., Hertz Global and HyreCar go up and down completely randomly.

Pair Corralation between Hertz Global and HyreCar

Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the HyreCar. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Holdings is 11.74 times less risky than HyreCar. The stock trades about -0.04 of its potential returns per unit of risk. The HyreCar is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  46.00  in HyreCar on September 4, 2024 and sell it today you would lose (46.00) from holding HyreCar or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Hertz Global Holdings  vs.  HyreCar

Hertz Global Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 12 (%) 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.

HyreCar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HyreCar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hertz Global and HyreCar

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

The idea behind Hertz Global Holdings and HyreCar 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.