Correlation Between Avis Budget and Hafnia
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Hafnia 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 Hafnia 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 Hafnia Limited, you can compare the effects of market volatilities on Avis Budget and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Hafnia.
Diversification Opportunities for Avis Budget and Hafnia
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and Hafnia is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Avis Budget i.e., Avis Budget and Hafnia go up and down completely randomly.
Pair Corralation between Avis Budget and Hafnia
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Hafnia. In addition to that, Avis Budget is 1.18 times more volatile than Hafnia Limited. It trades about -0.01 of its total potential returns per unit of risk. Hafnia Limited is currently generating about 0.04 per unit of volatility. If you would invest 411.00 in Hafnia Limited on September 3, 2024 and sell it today you would earn a total of 158.00 from holding Hafnia Limited or generate 38.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Avis Budget Group vs. Hafnia Limited
Performance |
| Timeline |
| Avis Budget Group |
| Hafnia Limited |
Avis Budget and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Hafnia
The main advantage of trading using opposite Avis Budget and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia'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 |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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