Correlation Between Avis Budget and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Avis Budget and PennantPark Floating 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 PennantPark Floating 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 PennantPark Floating Rate, you can compare the effects of market volatilities on Avis Budget and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and PennantPark Floating.
Diversification Opportunities for Avis Budget and PennantPark Floating
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avis and PennantPark is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Avis Budget i.e., Avis Budget and PennantPark Floating go up and down completely randomly.
Pair Corralation between Avis Budget and PennantPark Floating
Considering the 90-day investment horizon Avis Budget Group is expected to generate 5.98 times more return on investment than PennantPark Floating. However, Avis Budget is 5.98 times more volatile than PennantPark Floating Rate. It trades about 0.27 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about -0.04 per unit of risk. If you would invest 8,710 in Avis Budget Group on August 30, 2024 and sell it today you would earn a total of 2,174 from holding Avis Budget Group or generate 24.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. PennantPark Floating Rate
Performance |
| Timeline |
| Avis Budget Group |
| PennantPark Floating Rate |
Avis Budget and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and PennantPark Floating
The main advantage of trading using opposite Avis Budget and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating'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 |
| PennantPark Floating vs. TPG Inc | PennantPark Floating vs. Carlyle Secured Lending | PennantPark Floating vs. Brookfield Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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