Correlation Between Hertz Global and PPL
Can any of the company-specific risk be diversified away by investing in both Hertz Global and PPL 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 Hertz Global and PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Holdings and PPL Corporation, you can compare the effects of market volatilities on Hertz Global and PPL 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 Hertz Global with a short position of PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and PPL.
Diversification Opportunities for Hertz Global and PPL
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hertz and PPL is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation and Hertz Global 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 Hertz Global Holdings are associated (or correlated) with PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Hertz Global i.e., Hertz Global and PPL go up and down completely randomly.
Pair Corralation between Hertz Global and PPL
Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the PPL. In addition to that, Hertz Global is 4.98 times more volatile than PPL Corporation. It trades about -0.18 of its total potential returns per unit of risk. PPL Corporation is currently generating about 0.1 per unit of volatility. If you would invest 2,725 in PPL Corporation on February 8, 2024 and sell it today you would earn a total of 110.00 from holding PPL Corporation or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hertz Global Holdings vs. PPL Corp.
Performance |
Timeline |
Hertz Global Holdings |
PPL Corporation |
Hertz Global and PPL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hertz Global and PPL
The main advantage of trading using opposite Hertz Global and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.Hertz Global vs. United Rentals | Hertz Global vs. Herc Holdings | Hertz Global vs. Air Lease | Hertz Global vs. The Aarons |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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