Correlation Between Avis Budget and Aarons
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Aarons 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 Avis Budget and Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avis Budget Group and The Aarons, you can compare the effects of market volatilities on Avis Budget and Aarons 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 Avis Budget with a short position of Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Aarons.
Diversification Opportunities for Avis Budget and Aarons
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avis and Aarons is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and Avis Budget 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 Avis Budget Group are associated (or correlated) with Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of Avis Budget i.e., Avis Budget and Aarons go up and down completely randomly.
Pair Corralation between Avis Budget and Aarons
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Aarons. In addition to that, Avis Budget is 1.08 times more volatile than The Aarons. It trades about -0.04 of its total potential returns per unit of risk. The Aarons is currently generating about 0.04 per unit of volatility. If you would invest 831.00 in The Aarons on August 26, 2024 and sell it today you would earn a total of 178.00 from holding The Aarons or generate 21.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.54% |
| Values | Daily Returns |
Avis Budget Group vs. The Aarons
Performance |
| Timeline |
| Avis Budget Group |
| Aarons |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Avis Budget and Aarons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Aarons
The main advantage of trading using opposite Avis Budget and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Aarons 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 Aarons will offset losses from the drop in Aarons' long position.| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
| Aarons vs. Custom Truck One | Aarons vs. PROG Holdings | Aarons vs. McGrath RentCorp | Aarons vs. HE Equipment Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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