Correlation Between American Electric and Hertz Global
Can any of the company-specific risk be diversified away by investing in both American Electric 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 American Electric and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Electric Power and Hertz Global Holdings, you can compare the effects of market volatilities on American Electric 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 American Electric with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Electric and Hertz Global.
Diversification Opportunities for American Electric and Hertz Global
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Hertz is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Electric Power 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 American Electric 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 American Electric Power 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 American Electric i.e., American Electric and Hertz Global go up and down completely randomly.
Pair Corralation between American Electric and Hertz Global
Considering the 90-day investment horizon American Electric Power is expected to generate 0.2 times more return on investment than Hertz Global. However, American Electric Power is 4.89 times less risky than Hertz Global. It trades about 0.22 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.24 per unit of risk. If you would invest 8,427 in American Electric Power on February 8, 2024 and sell it today you would earn a total of 560.00 from holding American Electric Power or generate 6.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Electric Power vs. Hertz Global Holdings
Performance |
Timeline |
American Electric Power |
Hertz Global Holdings |
American Electric and Hertz Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Electric and Hertz Global
The main advantage of trading using opposite American Electric and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Electric 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.American Electric vs. Southern Company | American Electric vs. Dominion Energy | American Electric vs. Nextera Energy | American Electric vs. Consolidated Edison |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |