Correlation Between Hertz Global and PROG Holdings

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

Diversification Opportunities for Hertz Global and PROG Holdings

0.46

Correlation Coefficient

Hertz Global  PROG Holdings

Very weak diversification

The 3 months correlation between Hertz and PROG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings 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 PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Hertz Global i.e., Hertz Global and PROG Holdings go up and down completely randomly.

Pair Corralation between Hertz Global and PROG Holdings

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 2.15 times more return on investment than PROG Holdings. However, Hertz Global is 2.15 times more volatile than PROG Holdings. It trades about 0.16 of its potential returns per unit of risk. PROG Holdings is currently generating about 0.03 per unit of risk. If you would invest  292.00  in Hertz Global Holdings on September 4, 2024 and sell it today you would earn a total of  159.00  from holding Hertz Global Holdings or generate 54.45% return on investment over 90 days.

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

Hertz Global Holdings  vs.  PROG Holdings

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.

PROG Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PROG Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hertz Global and PROG Holdings

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

The idea behind Hertz Global Holdings and PROG Holdings 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.