Correlation Between Hertz Global and SUNation Energy

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

Diversification Opportunities for Hertz Global and SUNation Energy

-0.08

Correlation Coefficient

Hertz Global  SUNation Energy

Good diversification

The 3 months correlation between Hertz and SUNation is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy 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 SUNation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNation Energy has no effect on the direction of Hertz Global i.e., Hertz Global and SUNation Energy go up and down completely randomly.

Pair Corralation between Hertz Global and SUNation Energy

Assuming the 90 days horizon Hertz Global Hldgs is expected to generate 0.89 times more return on investment than SUNation Energy. However, Hertz Global Hldgs is 1.12 times less risky than SUNation Energy. It trades about 0.1 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.24 per unit of risk. If you would invest  191.00  in Hertz Global Hldgs on October 26, 2024 and sell it today you would earn a total of  45.00  from holding Hertz Global Hldgs or generate 23.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Hertz Global Hldgs  vs.  SUNation Energy

Hertz Global Hldgs

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 7 (%) 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.

SUNation Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hertz Global and SUNation Energy

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

The idea behind Hertz Global Hldgs and SUNation Energy 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.