Correlation Between NESNVX and Hertz Global

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

By analyzing existing cross correlation between NESNVX 625 15 JAN 26 and Hertz Global Holdings, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Hertz Global.

Diversification Opportunities for NESNVX and Hertz Global

0.56

Correlation Coefficient

NESNVX  Hertz Global

Very weak diversification

The 3 months correlation between NESNVX and Hertz is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 625 15 JAN 26 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 NESNVX 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 NESNVX 625 15 JAN 26 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 NESNVX i.e., NESNVX and Hertz Global go up and down completely randomly.

Pair Corralation between NESNVX and Hertz Global

Assuming the 90 days trading horizon NESNVX 625 15 JAN 26 is expected to generate 0.36 times more return on investment than Hertz Global. However, NESNVX 625 15 JAN 26 is 2.77 times less risky than Hertz Global. It trades about -0.42 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.32 per unit of risk. If you would invest  9,568  in NESNVX 625 15 JAN 26 on September 26, 2024 and sell it today you would lose (554.00) from holding NESNVX 625 15 JAN 26 or give up 5.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	47.62%
Values	Daily Returns

NESNVX 625 15 JAN 26  vs.  Hertz Global Holdings

NESNVX 625 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 625 15 JAN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 625 15 JAN 26 investors.

Hertz Global Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 3 (%) 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 NESNVX and Hertz Global

The main advantage of trading using opposite NESNVX and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 625 15 JAN 26 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.