Correlation Between Hertz Global and Denison Mines

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

Diversification Opportunities for Hertz Global and Denison Mines

0.45

Correlation Coefficient

Hertz Global  Denison Mines

Very weak diversification

The 3 months correlation between Hertz and Denison is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Hertz Global i.e., Hertz Global and Denison Mines go up and down completely randomly.

Pair Corralation between Hertz Global and Denison Mines

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the Denison Mines. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Hldgs is 1.13 times less risky than Denison Mines. The stock trades about -0.18 of its potential returns per unit of risk. The Denison Mines Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Denison Mines Corp on October 11, 2024 and sell it today you would lose (26.00) from holding Denison Mines Corp or give up 11.71% of portfolio value over 90 days.

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

Hertz Global Hldgs  vs.  Denison Mines Corp

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.

Denison Mines Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hertz Global and Denison Mines

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

The idea behind Hertz Global Hldgs and Denison Mines Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.