Correlation Between Hertz Global and EXPRESS

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

Diversification Opportunities for Hertz Global and EXPRESS

0.17

Correlation Coefficient

Hertz Global  EXPRESS

Average diversification

The 3 months correlation between Hertz and EXPRESS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and EXPRESS SCRIPTS HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPRESS SCRIPTS HLDG 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 EXPRESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPRESS SCRIPTS HLDG has no effect on the direction of Hertz Global i.e., Hertz Global and EXPRESS go up and down completely randomly.

Pair Corralation between Hertz Global and EXPRESS

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the EXPRESS. In addition to that, Hertz Global is 5.73 times more volatile than EXPRESS SCRIPTS HLDG. It trades about -0.23 of its total potential returns per unit of risk. EXPRESS SCRIPTS HLDG is currently generating about -0.21 per unit of volatility. If you would invest  9,738  in EXPRESS SCRIPTS HLDG on October 9, 2024 and sell it today you would lose (266.00) from holding EXPRESS SCRIPTS HLDG or give up 2.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Hertz Global Hldgs  vs.  EXPRESS SCRIPTS HLDG

Hertz Global Hldgs

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 3 (%) 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.

EXPRESS SCRIPTS HLDG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXPRESS SCRIPTS HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EXPRESS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hertz Global and EXPRESS

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

The idea behind Hertz Global Hldgs and EXPRESS SCRIPTS HLDG 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.