Correlation Between Hertz Global and Origin Materials

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

Diversification Opportunities for Hertz Global and Origin Materials

-0.47

Correlation Coefficient

Hertz Global  Origin Materials

Very good diversification

The 3 months correlation between Hertz and Origin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Hertz Global i.e., Hertz Global and Origin Materials go up and down completely randomly.

Pair Corralation between Hertz Global and Origin Materials

Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the Origin Materials. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Holdings is 1.37 times less risky than Origin Materials. The stock trades about -0.04 of its potential returns per unit of risk. The Origin Materials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Origin Materials on October 2, 2024 and sell it today you would earn a total of  77.50  from holding Origin Materials or generate 155.0% 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.  Origin Materials

Hertz Global Holdings

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Hertz Global and Origin Materials

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

The idea behind Hertz Global Holdings and Origin Materials 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 Global Correlations module to find global opportunities by holding instruments from different markets.