Correlation Between Avis Budget and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Coupang LLC 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 Coupang LLC 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 Coupang LLC, you can compare the effects of market volatilities on Avis Budget and Coupang LLC 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 Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Coupang LLC.
Diversification Opportunities for Avis Budget and Coupang LLC
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Avis and Coupang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC 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 Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Avis Budget i.e., Avis Budget and Coupang LLC go up and down completely randomly.
Pair Corralation between Avis Budget and Coupang LLC
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Coupang LLC. In addition to that, Avis Budget is 1.38 times more volatile than Coupang LLC. It trades about -0.01 of its total potential returns per unit of risk. Coupang LLC is currently generating about 0.04 per unit of volatility. If you would invest 1,813 in Coupang LLC on August 30, 2024 and sell it today you would earn a total of 734.00 from holding Coupang LLC or generate 40.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Coupang LLC
Performance |
| Timeline |
| Avis Budget Group |
| Coupang LLC |
Avis Budget and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Coupang LLC
The main advantage of trading using opposite Avis Budget and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC'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 |
| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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