Correlation Between Avis Budget and African Discovery
Can any of the company-specific risk be diversified away by investing in both Avis Budget and African Discovery 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 African Discovery 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 African Discovery Group, you can compare the effects of market volatilities on Avis Budget and African Discovery 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 African Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and African Discovery.
Diversification Opportunities for Avis Budget and African Discovery
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and African is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and African Discovery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Discovery 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 African Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Discovery has no effect on the direction of Avis Budget i.e., Avis Budget and African Discovery go up and down completely randomly.
Pair Corralation between Avis Budget and African Discovery
If you would invest 8,236 in Avis Budget Group on August 26, 2024 and sell it today you would earn a total of 2,031 from holding Avis Budget Group or generate 24.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. African Discovery Group
Performance |
| Timeline |
| Avis Budget Group |
| African Discovery |
Avis Budget and African Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and African Discovery
The main advantage of trading using opposite Avis Budget and African Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, African Discovery 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 African Discovery will offset losses from the drop in African Discovery'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 |
| African Discovery vs. Black Diamond Group | African Discovery vs. Alta Equipment Group | African Discovery vs. Ashtead Group plc | African Discovery vs. BOC Aviation Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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