Correlation Between Origin Materials and Hertz Global

Can any of the company-specific risk be diversified away by investing in both Origin Materials and Hertz Global 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 Origin Materials and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Origin Materials and Hertz Global Holdings, you can compare the effects of market volatilities on Origin Materials and Hertz Global 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 Origin Materials with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Hertz Global.

Diversification Opportunities for Origin Materials and Hertz Global

-0.47

Correlation Coefficient

Origin Materials  Hertz Global

Very good diversification

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

Pair Corralation between Origin Materials and Hertz Global

Given the investment horizon of 90 days Origin Materials is expected to generate 1.37 times more return on investment than Hertz Global. However, Origin Materials is 1.37 times more volatile than Hertz Global Holdings. It trades about 0.09 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.04 per unit of risk. If you would invest  50.00  in Origin Materials on October 2, 2024 and sell it today you would earn a total of  77.50  from holding Origin Materials or generate 155.0% return on investment over 90 days.

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

Origin Materials  vs.  Hertz Global Holdings

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Hertz Global Holdings

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Origin Materials and Hertz Global

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

The idea behind Origin Materials and Hertz Global Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..