Correlation Between Broadstone Net and Hertz Global

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

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

Diversification Opportunities for Broadstone Net and Hertz Global

0.66

Correlation Coefficient

Broadstone Net  Hertz Global

Poor diversification

The 3 months correlation between Broadstone and Hertz is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net LeaseInc 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 Broadstone Net 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 Broadstone Net LeaseInc 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 Broadstone Net i.e., Broadstone Net and Hertz Global go up and down completely randomly.

Pair Corralation between Broadstone Net and Hertz Global

Considering the 90-day investment horizon Broadstone Net LeaseInc is expected to generate 0.25 times more return on investment than Hertz Global. However, Broadstone Net LeaseInc is 4.01 times less risky than Hertz Global. It trades about -0.19 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.38 per unit of risk. If you would invest  1,547  in Broadstone Net LeaseInc on February 1, 2024 and sell it today you would lose (91.00) from holding Broadstone Net LeaseInc or give up 5.88% of portfolio value over 90 days.

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

Broadstone Net LeaseInc  vs.  Hertz Global Holdings

Broadstone Net LeaseInc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Broadstone Net LeaseInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Hertz Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Broadstone Net and Hertz Global

The main advantage of trading using opposite Broadstone Net and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net LeaseInc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.