Correlation Between Avis Budget and Trupanion
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Trupanion 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 Trupanion 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 Trupanion, you can compare the effects of market volatilities on Avis Budget and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Trupanion.
Diversification Opportunities for Avis Budget and Trupanion
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Avis and Trupanion is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Avis Budget i.e., Avis Budget and Trupanion go up and down completely randomly.
Pair Corralation between Avis Budget and Trupanion
Considering the 90-day investment horizon Avis Budget Group is expected to generate 1.37 times more return on investment than Trupanion. However, Avis Budget is 1.37 times more volatile than Trupanion. It trades about 0.3 of its potential returns per unit of risk. Trupanion is currently generating about -0.01 per unit of risk. If you would invest 8,544 in Avis Budget Group on August 28, 2024 and sell it today you would earn a total of 2,337 from holding Avis Budget Group or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Trupanion
Performance |
| Timeline |
| Avis Budget Group |
| Trupanion |
Avis Budget and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Trupanion
The main advantage of trading using opposite Avis Budget and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion'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 |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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