Correlation Between INTEL and Hertz Global

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

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

Diversification Opportunities for INTEL and Hertz Global

-0.47

Correlation Coefficient

INTEL  Hertz Global

Very good diversification

The 3 months correlation between INTEL and Hertz is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding INTEL PORATION 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 INTEL 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 INTEL PORATION 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 INTEL i.e., INTEL and Hertz Global go up and down completely randomly.

Pair Corralation between INTEL and Hertz Global

Assuming the 90 days trading horizon INTEL PORATION is expected to generate 1.38 times more return on investment than Hertz Global. However, INTEL is 1.38 times more volatile than Hertz Global Hldgs. It trades about 0.15 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.18 per unit of risk. If you would invest  8,174  in INTEL PORATION on October 11, 2024 and sell it today you would earn a total of  1,276  from holding INTEL PORATION or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

INTEL PORATION  vs.  Hertz Global Hldgs

INTEL PORATION

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL PORATION are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, INTEL sustained solid returns over the last few months and may actually be approaching a breakup point.

Hertz Global Hldgs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 5 (%) 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.

Pair Trading with INTEL and Hertz Global

The main advantage of trading using opposite INTEL and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTEL 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 INTEL PORATION 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .