Correlation Between Avis Budget and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Avis Budget and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Natural Alternatives.
Diversification Opportunities for Avis Budget and Natural Alternatives
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and Natural is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Avis Budget i.e., Avis Budget and Natural Alternatives go up and down completely randomly.
Pair Corralation between Avis Budget and Natural Alternatives
Considering the 90-day investment horizon Avis Budget Group is expected to generate 1.19 times more return on investment than Natural Alternatives. However, Avis Budget is 1.19 times more volatile than Natural Alternatives International. It trades about 0.19 of its potential returns per unit of risk. Natural Alternatives International is currently generating about 0.03 per unit of risk. If you would invest 8,386 in Avis Budget Group on September 3, 2024 and sell it today you would earn a total of 2,521 from holding Avis Budget Group or generate 30.06% 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. Natural Alternatives Internati
Performance |
| Timeline |
| Avis Budget Group |
| Natural Alternatives |
Avis Budget and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Natural Alternatives
The main advantage of trading using opposite Avis Budget and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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