Correlation Between PROG Holdings and Herc Holdings

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

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

Diversification Opportunities for PROG Holdings and Herc Holdings

0.94

Correlation Coefficient

PROG Holdings  Herc Holdings

Almost no diversification

The 3 months correlation between PROG and Herc is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and PROG Holdings 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 PROG Holdings are associated (or correlated) with Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of PROG Holdings i.e., PROG Holdings and Herc Holdings go up and down completely randomly.

Pair Corralation between PROG Holdings and Herc Holdings

Considering the 90-day investment horizon PROG Holdings is expected to under-perform the Herc Holdings. In addition to that, PROG Holdings is 1.28 times more volatile than Herc Holdings. It trades about -0.15 of its total potential returns per unit of risk. Herc Holdings is currently generating about -0.13 per unit of volatility. If you would invest  19,185  in Herc Holdings on December 26, 2024 and sell it today you would lose (4,882) from holding Herc Holdings or give up 25.45% of portfolio value over 90 days.

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

PROG Holdings  vs.  Herc Holdings

PROG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Herc Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herc Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with PROG Holdings and Herc Holdings

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

The idea behind PROG Holdings and Herc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..