Correlation Between Avis Budget and Willis Lease
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Willis Lease 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 Willis Lease 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 Willis Lease Finance, you can compare the effects of market volatilities on Avis Budget and Willis Lease 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 Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Willis Lease.
Diversification Opportunities for Avis Budget and Willis Lease
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Avis and Willis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance 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 Willis Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Lease Finance has no effect on the direction of Avis Budget i.e., Avis Budget and Willis Lease go up and down completely randomly.
Pair Corralation between Avis Budget and Willis Lease
Considering the 90-day investment horizon Avis Budget Group is expected to generate 0.71 times more return on investment than Willis Lease. However, Avis Budget Group is 1.42 times less risky than Willis Lease. It trades about 0.28 of its potential returns per unit of risk. Willis Lease Finance is currently generating about 0.07 per unit of risk. If you would invest 7,965 in Avis Budget Group on August 23, 2024 and sell it today you would earn a total of 2,199 from holding Avis Budget Group or generate 27.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Willis Lease Finance
Performance |
| Timeline |
| Avis Budget Group |
| Willis Lease Finance |
Avis Budget and Willis Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Willis Lease
The main advantage of trading using opposite Avis Budget and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Willis Lease 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 Willis Lease will offset losses from the drop in Willis Lease'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 |
| Willis Lease vs. Custom Truck One | Willis Lease vs. GATX Corporation | Willis Lease vs. HE Equipment Services | Willis Lease vs. Alta Equipment Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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