Correlation Between Avis Budget and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Hertz Global 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 Hertz Global 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 Hertz Global Holdings, you can compare the effects of market volatilities on Avis Budget and Hertz Global 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 Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Hertz Global.
Diversification Opportunities for Avis Budget and Hertz Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avis and Hertz is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of Avis Budget i.e., Avis Budget and Hertz Global go up and down completely randomly.
Pair Corralation between Avis Budget and Hertz Global
Considering the 90-day investment horizon Avis Budget is expected to generate 1.16 times less return on investment than Hertz Global. But when comparing it to its historical volatility, Avis Budget Group is 1.18 times less risky than Hertz Global. It trades about 0.28 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 295.00 in Hertz Global Holdings on August 23, 2024 and sell it today you would earn a total of 94.00 from holding Hertz Global Holdings or generate 31.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Hertz Global Holdings
Performance |
| Timeline |
| Avis Budget Group |
| Hertz Global Holdings |
Avis Budget and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Hertz Global
The main advantage of trading using opposite Avis Budget and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global'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 |
| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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