Correlation Between Hertz Global and NOVANT

Can any of the company-specific risk be diversified away by investing in both Hertz Global and NOVANT 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 NOVANT 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 NOVANT 2637 01 NOV 36, you can compare the effects of market volatilities on Hertz Global and NOVANT 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 NOVANT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and NOVANT.

Diversification Opportunities for Hertz Global and NOVANT

-0.13

Correlation Coefficient

Hertz Global  NOVANT

Good diversification

The 3 months correlation between Hertz and NOVANT is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and NOVANT 2637 01 NOV 36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVANT 2637 01 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 NOVANT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVANT 2637 01 has no effect on the direction of Hertz Global i.e., Hertz Global and NOVANT go up and down completely randomly.

Pair Corralation between Hertz Global and NOVANT

Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 3.82 times more return on investment than NOVANT. However, Hertz Global is 3.82 times more volatile than NOVANT 2637 01 NOV 36. It trades about 0.07 of its potential returns per unit of risk. NOVANT 2637 01 NOV 36 is currently generating about 0.05 per unit of risk. If you would invest  354.00  in Hertz Global Holdings on December 30, 2024 and sell it today you would earn a total of  62.00  from holding Hertz Global Holdings or generate 17.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.1%
Values	Daily Returns

Hertz Global Holdings  vs.  NOVANT 2637 01 NOV 36

Hertz Global Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 5 (%) 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.

NOVANT 2637 01

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOVANT 2637 01 NOV 36 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NOVANT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hertz Global and NOVANT

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

The idea behind Hertz Global Holdings and NOVANT 2637 01 NOV 36 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.