Correlation Between Avis Budget and Above Food
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Above Food 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 Above Food 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 Above Food Ingredients, you can compare the effects of market volatilities on Avis Budget and Above Food 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 Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Above Food.
Diversification Opportunities for Avis Budget and Above Food
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avis and Above is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients 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 Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Avis Budget i.e., Avis Budget and Above Food go up and down completely randomly.
Pair Corralation between Avis Budget and Above Food
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Above Food. But the stock apears to be less risky and, when comparing its historical volatility, Avis Budget Group is 6.75 times less risky than Above Food. The stock trades about -0.04 of its potential returns per unit of risk. The Above Food Ingredients is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Above Food Ingredients on September 2, 2024 and sell it today you would lose (1.53) from holding Above Food Ingredients or give up 27.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.95% |
| Values | Daily Returns |
Avis Budget Group vs. Above Food Ingredients
Performance |
| Timeline |
| Avis Budget Group |
| Above Food Ingredients |
Avis Budget and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Above Food
The main advantage of trading using opposite Avis Budget and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
| Above Food vs. Tandy Leather Factory | Above Food vs. Skechers USA | Above Food vs. Kontoor Brands | Above Food vs. Nike Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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