Correlation Between PROG Holdings and Hertz Global

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

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

Diversification Opportunities for PROG Holdings and Hertz Global

0.4

Correlation Coefficient

PROG Holdings  Hertz Global

Very weak diversification

The 3 months correlation between PROG and Hertz is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 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 Hldgs has no effect on the direction of PROG Holdings i.e., PROG Holdings and Hertz Global go up and down completely randomly.

Pair Corralation between PROG Holdings and Hertz Global

Considering the 90-day investment horizon PROG Holdings is expected to generate 0.7 times more return on investment than Hertz Global. However, PROG Holdings is 1.43 times less risky than Hertz Global. It trades about 0.08 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.05 per unit of risk. If you would invest  1,806  in PROG Holdings on September 29, 2024 and sell it today you would earn a total of  2,409  from holding PROG Holdings or generate 133.39% return on investment over 90 days.

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

PROG Holdings  vs.  Hertz Global Hldgs

PROG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hertz Global Hldgs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hertz Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PROG Holdings and Hertz Global

The main advantage of trading using opposite PROG Holdings and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROG Holdings 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 PROG Holdings and Hertz Global Hldgs 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.