Correlation Between Hertz Global and Ryder System

Can any of the company-specific risk be diversified away by investing in both Hertz Global and Ryder System 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 Ryder System 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 Ryder System, you can compare the effects of market volatilities on Hertz Global and Ryder System 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 Ryder System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Ryder System.

Diversification Opportunities for Hertz Global and Ryder System

-0.41

Correlation Coefficient

Hertz Global  Ryder System

Very good diversification

The 3 months correlation between Hertz and Ryder is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System 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 Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of Hertz Global i.e., Hertz Global and Ryder System go up and down completely randomly.

Pair Corralation between Hertz Global and Ryder System

Assuming the 90 days horizon Hertz Global Hldgs is expected to under-perform the Ryder System. In addition to that, Hertz Global is 1.72 times more volatile than Ryder System. It trades about -0.3 of its total potential returns per unit of risk. Ryder System is currently generating about 0.09 per unit of volatility. If you would invest  11,860  in Ryder System on February 5, 2024 and sell it today you would earn a total of  606.00  from holding Ryder System or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hertz Global Hldgs  vs.  Ryder System

Hertz Global Hldgs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Hldgs 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 stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ryder System

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ryder System are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Ryder System may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Hertz Global and Ryder System

The main advantage of trading using opposite Hertz Global and Ryder System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global position performs unexpectedly, Ryder System 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 Ryder System will offset losses from the drop in Ryder System's long position.

The idea behind Hertz Global Hldgs and Ryder System 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.