Correlation Between AVIS BUDGET and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both AVIS BUDGET and Hanover Insurance 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 Hanover Insurance 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 The Hanover Insurance, you can compare the effects of market volatilities on AVIS BUDGET and Hanover Insurance 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVIS BUDGET and Hanover Insurance.
Diversification Opportunities for AVIS BUDGET and Hanover Insurance
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVIS and Hanover is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AVIS BUDGET GROUP and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of AVIS BUDGET i.e., AVIS BUDGET and Hanover Insurance go up and down completely randomly.
Pair Corralation between AVIS BUDGET and Hanover Insurance
Assuming the 90 days trading horizon AVIS BUDGET GROUP is expected to generate 2.85 times more return on investment than Hanover Insurance. However, AVIS BUDGET is 2.85 times more volatile than The Hanover Insurance. It trades about 0.14 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.21 per unit of risk. If you would invest 7,372 in AVIS BUDGET GROUP on September 2, 2024 and sell it today you would earn a total of 2,933 from holding AVIS BUDGET GROUP or generate 39.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVIS BUDGET GROUP vs. The Hanover Insurance
Performance |
| Timeline |
| AVIS BUDGET GROUP |
| Hanover Insurance |
AVIS BUDGET and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVIS BUDGET and Hanover Insurance
The main advantage of trading using opposite AVIS BUDGET and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIS BUDGET position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| AVIS BUDGET vs. SIVERS SEMICONDUCTORS AB | AVIS BUDGET vs. Darden Restaurants | AVIS BUDGET vs. Reliance Steel Aluminum | AVIS BUDGET vs. Q2M Managementberatung AG |
| Hanover Insurance vs. Lion One Metals | Hanover Insurance vs. Jacquet Metal Service | Hanover Insurance vs. PARKEN Sport Entertainment | Hanover Insurance vs. Aluminum of |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |