Correlation Between Hertz Global and United Rentals
Can any of the company-specific risk be diversified away by investing in both Hertz Global and United Rentals 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 United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Hldgs and United Rentals, you can compare the effects of market volatilities on Hertz Global and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and United Rentals.
Diversification Opportunities for Hertz Global and United Rentals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hertz and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 Hldgs are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Hertz Global i.e., Hertz Global and United Rentals go up and down completely randomly.
Pair Corralation between Hertz Global and United Rentals
Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the United Rentals. In addition to that, Hertz Global is 1.45 times more volatile than United Rentals. It trades about -0.06 of its total potential returns per unit of risk. United Rentals is currently generating about 0.09 per unit of volatility. If you would invest 26,273 in United Rentals on February 13, 2024 and sell it today you would earn a total of 43,996 from holding United Rentals or generate 167.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hertz Global Hldgs vs. United Rentals
Performance |
Timeline |
Hertz Global Hldgs |
United Rentals |
Hertz Global and United Rentals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hertz Global and United Rentals
The main advantage of trading using opposite Hertz Global and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.Hertz Global vs. AerCap Holdings NV | Hertz Global vs. The Aarons | Hertz Global vs. Alta Equipment Group | Hertz Global vs. PROG Holdings |
United Rentals vs. The Aarons | United Rentals vs. Alta Equipment Group | United Rentals vs. Herc Holdings | United Rentals vs. GATX Corporation |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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