Correlation Between GAMESTOP and Avis Budget
Can any of the company-specific risk be diversified away by investing in both GAMESTOP and Avis Budget 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 GAMESTOP and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and Avis Budget Group, you can compare the effects of market volatilities on GAMESTOP and Avis Budget 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 GAMESTOP with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Avis Budget.
Diversification Opportunities for GAMESTOP and Avis Budget
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GAMESTOP and Avis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group and GAMESTOP 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 GAMESTOP are associated (or correlated) with Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of GAMESTOP i.e., GAMESTOP and Avis Budget go up and down completely randomly.
Pair Corralation between GAMESTOP and Avis Budget
Assuming the 90 days trading horizon GAMESTOP is expected to under-perform the Avis Budget. In addition to that, GAMESTOP is 1.47 times more volatile than Avis Budget Group. It trades about -0.3 of its total potential returns per unit of risk. Avis Budget Group is currently generating about 0.27 per unit of volatility. If you would invest 7,972 in Avis Budget Group on November 6, 2024 and sell it today you would earn a total of 1,034 from holding Avis Budget Group or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. Avis Budget Group
Performance |
| Timeline |
| GAMESTOP |
| Avis Budget Group |
GAMESTOP and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and Avis Budget
The main advantage of trading using opposite GAMESTOP and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP position performs unexpectedly, Avis Budget 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 Avis Budget will offset losses from the drop in Avis Budget's long position.| GAMESTOP vs. Keck Seng Investments | GAMESTOP vs. GEAR4MUSIC LS 10 | GAMESTOP vs. UNIVERSAL MUSIC GROUP | GAMESTOP vs. Gladstone Investment |
| Avis Budget vs. Aluminum of | Avis Budget vs. ADRIATIC METALS LS 013355 | Avis Budget vs. Osisko Metals | Avis Budget vs. PARKEN Sport Entertainment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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