Correlation Between Avis Budget and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Avis Budget and DTE Energy 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 DTE Energy 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 DTE Energy, you can compare the effects of market volatilities on Avis Budget and DTE Energy 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 DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and DTE Energy.
Diversification Opportunities for Avis Budget and DTE Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and DTE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy 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 DTE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTE Energy has no effect on the direction of Avis Budget i.e., Avis Budget and DTE Energy go up and down completely randomly.
Pair Corralation between Avis Budget and DTE Energy
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the DTE Energy. In addition to that, Avis Budget is 3.8 times more volatile than DTE Energy. It trades about -0.03 of its total potential returns per unit of risk. DTE Energy is currently generating about -0.01 per unit of volatility. If you would invest 2,031 in DTE Energy on August 28, 2024 and sell it today you would lose (80.00) from holding DTE Energy or give up 3.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. DTE Energy
Performance |
| Timeline |
| Avis Budget Group |
| DTE Energy |
Avis Budget and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and DTE Energy
The main advantage of trading using opposite Avis Budget and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, DTE Energy 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 DTE Energy will offset losses from the drop in DTE Energy'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 |
| DTE Energy vs. Kanzhun Ltd ADR | DTE Energy vs. Sonic Automotive | DTE Energy vs. Avis Budget Group | DTE Energy vs. DTE Energy |
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.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |