Correlation Between Bayerische Motoren and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Bayerische Motoren 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 Bayerische Motoren and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayerische Motoren Werke and Avis Budget Group, you can compare the effects of market volatilities on Bayerische Motoren 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 Bayerische Motoren with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayerische Motoren and Avis Budget.
Diversification Opportunities for Bayerische Motoren and Avis Budget
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bayerische and Avis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bayerische Motoren Werke 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 Bayerische Motoren 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 Bayerische Motoren Werke 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 Bayerische Motoren i.e., Bayerische Motoren and Avis Budget go up and down completely randomly.
Pair Corralation between Bayerische Motoren and Avis Budget
Assuming the 90 days trading horizon Bayerische Motoren Werke is expected to generate 0.47 times more return on investment than Avis Budget. However, Bayerische Motoren Werke is 2.15 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 171,045 in Bayerische Motoren Werke on September 14, 2024 and sell it today you would lose (9,623) from holding Bayerische Motoren Werke or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayerische Motoren Werke vs. Avis Budget Group
Performance |
| Timeline |
| Bayerische Motoren Werke |
| Avis Budget Group |
Bayerische Motoren and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayerische Motoren and Avis Budget
The main advantage of trading using opposite Bayerische Motoren and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayerische Motoren 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.| Bayerische Motoren vs. Verizon Communications | Bayerische Motoren vs. United Airlines Holdings | Bayerische Motoren vs. First Republic Bank | Bayerische Motoren vs. McEwen Mining |
| Avis Budget vs. Applied Materials | Avis Budget vs. Grupo Carso SAB | Avis Budget vs. Southwest Airlines | Avis Budget vs. United Airlines Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |