Correlation Between Avis Budget and BW LPG
Can any of the company-specific risk be diversified away by investing in both Avis Budget and BW LPG 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 BW LPG 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 BW LPG Limited, you can compare the effects of market volatilities on Avis Budget and BW LPG 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 BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and BW LPG.
Diversification Opportunities for Avis Budget and BW LPG
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and BWLP is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited 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 BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Avis Budget i.e., Avis Budget and BW LPG go up and down completely randomly.
Pair Corralation between Avis Budget and BW LPG
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the BW LPG. But the stock apears to be less risky and, when comparing its historical volatility, Avis Budget Group is 1.0 times less risky than BW LPG. The stock trades about -0.01 of its potential returns per unit of risk. The BW LPG Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 529.00 in BW LPG Limited on September 12, 2024 and sell it today you would earn a total of 648.00 from holding BW LPG Limited or generate 122.5% 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. BW LPG Limited
Performance |
| Timeline |
| Avis Budget Group |
| BW LPG Limited |
Avis Budget and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and BW LPG
The main advantage of trading using opposite Avis Budget and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG'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 |
| BW LPG vs. Avis Budget Group | BW LPG vs. Asure Software | BW LPG vs. Iridium Communications | BW LPG vs. Vestis |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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