Correlation Between Avis Budget and Hasbro
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Hasbro 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 Hasbro 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 Hasbro Inc, you can compare the effects of market volatilities on Avis Budget and Hasbro 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 Hasbro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Hasbro.
Diversification Opportunities for Avis Budget and Hasbro
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and Hasbro is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Avis Budget i.e., Avis Budget and Hasbro go up and down completely randomly.
Pair Corralation between Avis Budget and Hasbro
Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Hasbro. In addition to that, Avis Budget is 1.63 times more volatile than Hasbro Inc. It trades about -0.01 of its total potential returns per unit of risk. Hasbro Inc is currently generating about 0.03 per unit of volatility. If you would invest 5,502 in Hasbro Inc on September 3, 2024 and sell it today you would earn a total of 1,013 from holding Hasbro Inc or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Hasbro Inc
Performance |
| Timeline |
| Avis Budget Group |
| Hasbro Inc |
Avis Budget and Hasbro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Hasbro
The main advantage of trading using opposite Avis Budget and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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