Correlation Between Hertz Global and CompoSecure

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

Diversification Opportunities for Hertz Global and CompoSecure

0.15

Correlation Coefficient

Hertz Global  CompoSecure

Average diversification

The 3 months correlation between Hertz and CompoSecure is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Hldgs and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Hertz Global i.e., Hertz Global and CompoSecure go up and down completely randomly.

Pair Corralation between Hertz Global and CompoSecure

Assuming the 90 days horizon Hertz Global is expected to generate 37.37 times less return on investment than CompoSecure. In addition to that, Hertz Global is 1.54 times more volatile than CompoSecure. It trades about 0.0 of its total potential returns per unit of risk. CompoSecure is currently generating about 0.23 per unit of volatility. If you would invest  402.00  in CompoSecure on May 2, 2025 and sell it today you would earn a total of  213.00  from holding CompoSecure or generate 52.99% return on investment over 90 days.

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

Hertz Global Hldgs  vs.  CompoSecure

Hertz Global Hldgs

Risk-Adjusted Performance

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 fairly stable basic indicators, Hertz Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hertz Global and CompoSecure

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

The idea behind Hertz Global Hldgs and CompoSecure 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.