Correlation Between Avis Budget and CDT Environmental
Can any of the company-specific risk be diversified away by investing in both Avis Budget and CDT Environmental 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 CDT Environmental 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 CDT Environmental Technology, you can compare the effects of market volatilities on Avis Budget and CDT Environmental 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 CDT Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and CDT Environmental.
Diversification Opportunities for Avis Budget and CDT Environmental
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avis and CDT is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and CDT Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDT Environmental 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 CDT Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDT Environmental has no effect on the direction of Avis Budget i.e., Avis Budget and CDT Environmental go up and down completely randomly.
Pair Corralation between Avis Budget and CDT Environmental
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the CDT Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Avis Budget Group is 1.26 times less risky than CDT Environmental. The stock trades about -0.07 of its potential returns per unit of risk. The CDT Environmental Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 119.00 in CDT Environmental Technology on November 28, 2024 and sell it today you would earn a total of 12.00 from holding CDT Environmental Technology or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Avis Budget Group vs. CDT Environmental Technology
Performance |
| Timeline |
| Avis Budget Group |
| CDT Environmental |
Avis Budget and CDT Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and CDT Environmental
The main advantage of trading using opposite Avis Budget and CDT Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, CDT Environmental 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 CDT Environmental will offset losses from the drop in CDT Environmental'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 |
| CDT Environmental vs. Definitive Healthcare Corp | CDT Environmental vs. Summit Environmental | CDT Environmental vs. Titan International | CDT Environmental vs. ArcelorMittal SA ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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