Correlation Between Gaming and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Gaming and Avis Budget 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 Gaming and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and Avis Budget Group, you can compare the effects of market volatilities on Gaming and Avis Budget 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 Gaming with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Avis Budget.
Diversification Opportunities for Gaming and Avis Budget
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gaming and Avis is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group and Gaming 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 Gaming and Leisure are associated (or correlated) with Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Gaming i.e., Gaming and Avis Budget go up and down completely randomly.
Pair Corralation between Gaming and Avis Budget
Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.37 times more return on investment than Avis Budget. However, Gaming and Leisure is 2.72 times less risky than Avis Budget. It trades about 0.01 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.03 per unit of risk. If you would invest 4,387 in Gaming and Leisure on October 28, 2024 and sell it today you would earn a total of 156.00 from holding Gaming and Leisure or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming and Leisure vs. Avis Budget Group
Performance |
| Timeline |
| Gaming and Leisure |
| Avis Budget Group |
Gaming and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and Avis Budget
The main advantage of trading using opposite Gaming and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming position performs unexpectedly, Avis Budget 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 Avis Budget will offset losses from the drop in Avis Budget's long position.| Gaming vs. United Insurance Holdings | Gaming vs. The Hanover Insurance | Gaming vs. Universal Insurance Holdings | Gaming vs. REVO INSURANCE SPA |
| Avis Budget vs. United Rentals | Avis Budget vs. WillScot Mobile Mini | Avis Budget vs. ALD SA | Avis Budget vs. Sixt SE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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