Correlation Between Hertz Global and Ioneer

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

Diversification Opportunities for Hertz Global and Ioneer

-0.47

Correlation Coefficient

Hertz Global  Ioneer

Very good diversification

The 3 months correlation between Hertz and Ioneer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and ioneer Ltd American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer American 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 Ioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ioneer American has no effect on the direction of Hertz Global i.e., Hertz Global and Ioneer go up and down completely randomly.

Pair Corralation between Hertz Global and Ioneer

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the Ioneer. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Hldgs is 1.15 times less risky than Ioneer. The stock trades about -0.05 of its potential returns per unit of risk. The ioneer Ltd American is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,334  in ioneer Ltd American on October 11, 2024 and sell it today you would lose (929.00) from holding ioneer Ltd American or give up 69.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hertz Global Hldgs  vs.  ioneer Ltd American

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.

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hertz Global and Ioneer

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

The idea behind Hertz Global Hldgs and ioneer Ltd American 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.