Correlation Between Hertz Global and INTEL

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

Diversification Opportunities for Hertz Global and INTEL

0.24

Correlation Coefficient

Hertz Global  INTEL

Modest diversification

The 3 months correlation between Hertz and INTEL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION 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 INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of Hertz Global i.e., Hertz Global and INTEL go up and down completely randomly.

Pair Corralation between Hertz Global and INTEL

Assuming the 90 days horizon Hertz Global is expected to generate 1.09 times less return on investment than INTEL. But when comparing it to its historical volatility, Hertz Global Hldgs is 1.5 times less risky than INTEL. It trades about 0.18 of its potential returns per unit of risk. INTEL PORATION is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,808  in INTEL PORATION on October 25, 2024 and sell it today you would earn a total of  1,214  from holding INTEL PORATION or generate 15.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Hertz Global Hldgs  vs.  INTEL PORATION

Hertz Global Hldgs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 6 (%) 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.

INTEL PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hertz Global and INTEL

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

The idea behind Hertz Global Hldgs and INTEL PORATION 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.