Correlation Between Avis Budget and FlexShopper
Can any of the company-specific risk be diversified away by investing in both Avis Budget and FlexShopper 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 FlexShopper 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 FlexShopper, you can compare the effects of market volatilities on Avis Budget and FlexShopper 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 FlexShopper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and FlexShopper.
Diversification Opportunities for Avis Budget and FlexShopper
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Avis and FlexShopper is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper 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 FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Avis Budget i.e., Avis Budget and FlexShopper go up and down completely randomly.
Pair Corralation between Avis Budget and FlexShopper
Considering the 90-day investment horizon Avis Budget Group is expected to generate 0.68 times more return on investment than FlexShopper. However, Avis Budget Group is 1.46 times less risky than FlexShopper. It trades about 0.28 of its potential returns per unit of risk. FlexShopper is currently generating about 0.18 per unit of risk. If you would invest 7,965 in Avis Budget Group on August 23, 2024 and sell it today you would earn a total of 2,199 from holding Avis Budget Group or generate 27.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Avis Budget Group vs. FlexShopper
Performance |
Timeline |
Avis Budget Group |
FlexShopper |
Avis Budget and FlexShopper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avis Budget and FlexShopper
The main advantage of trading using opposite Avis Budget and FlexShopper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, FlexShopper 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 FlexShopper will offset losses from the drop in FlexShopper'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 |
FlexShopper vs. AZN Capital Corp | FlexShopper vs. Fortress Transportation and | FlexShopper vs. Ashtead Gro | FlexShopper vs. Alta Equipment Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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