Correlation Between Avis Budget and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Solution Financial 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 Solution Financial 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 Solution Financial, you can compare the effects of market volatilities on Avis Budget and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Solution Financial.
Diversification Opportunities for Avis Budget and Solution Financial
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avis and Solution is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Avis Budget i.e., Avis Budget and Solution Financial go up and down completely randomly.
Pair Corralation between Avis Budget and Solution Financial
Considering the 90-day investment horizon Avis Budget Group is expected to generate 1.57 times more return on investment than Solution Financial. However, Avis Budget is 1.57 times more volatile than Solution Financial. It trades about 0.27 of its potential returns per unit of risk. Solution Financial is currently generating about 0.01 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Solution Financial
Performance |
| Timeline |
| Avis Budget Group |
| Solution Financial |
Avis Budget and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Solution Financial
The main advantage of trading using opposite Avis Budget and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial'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 |
| Solution Financial vs. United Rentals | Solution Financial vs. Ashtead Group plc | Solution Financial vs. AerCap Holdings NV | Solution Financial vs. Fortress Transp Infra |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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