Correlation Between Hertz Global and RELIANCE

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

Diversification Opportunities for Hertz Global and RELIANCE

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Hertz and RELIANCE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and RELIANCE STL ALUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STL ALUM 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 RELIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STL ALUM has no effect on the direction of Hertz Global i.e., Hertz Global and RELIANCE go up and down completely randomly.

Pair Corralation between Hertz Global and RELIANCE

Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the RELIANCE. In addition to that, Hertz Global is 1.8 times more volatile than RELIANCE STL ALUM. It trades about -0.36 of its total potential returns per unit of risk. RELIANCE STL ALUM is currently generating about -0.37 per unit of volatility. If you would invest  11,197  in RELIANCE STL ALUM on September 29, 2024 and sell it today you would lose (367.00) from holding RELIANCE STL ALUM or give up 3.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy20.0%
ValuesDaily Returns

Hertz Global Holdings  vs.  RELIANCE STL ALUM

 Performance 
       Timeline  
Hertz Global Holdings 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 4 (%) 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.
RELIANCE STL ALUM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days RELIANCE STL ALUM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for RELIANCE STL ALUM investors.

Hertz Global and RELIANCE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hertz Global and RELIANCE

The main advantage of trading using opposite Hertz Global and RELIANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, RELIANCE 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 RELIANCE will offset losses from the drop in RELIANCE's long position.
The idea behind Hertz Global Holdings and RELIANCE STL ALUM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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