Correlation Between Hertz Global and EI Du

Can any of the company-specific risk be diversified away by investing in both Hertz Global and EI Du 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 EI Du into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hertz Global Hldgs and EI du Pont, you can compare the effects of market volatilities on Hertz Global and EI Du 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 EI Du. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and EI Du.

Diversification Opportunities for Hertz Global and EI Du

-0.49

Correlation Coefficient

Hertz Global  EI Du

Very good diversification

The 3 months correlation between Hertz and CTA-P-A is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont 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 Hldgs are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Hertz Global i.e., Hertz Global and EI Du go up and down completely randomly.

Pair Corralation between Hertz Global and EI Du

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the EI Du. In addition to that, Hertz Global is 2.62 times more volatile than EI du Pont. It trades about -0.05 of its total potential returns per unit of risk. EI du Pont is currently generating about -0.02 per unit of volatility. If you would invest  6,433  in EI du Pont on October 10, 2024 and sell it today you would lose (913.00) from holding EI du Pont or give up 14.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.18%
Values	Daily Returns

Hertz Global Hldgs  vs.  EI du Pont

Hertz Global Hldgs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs 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.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hertz Global and EI Du

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

The idea behind Hertz Global Hldgs and EI du Pont 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.