Correlation Between Hasbro and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Hasbro 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 Hasbro and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Avis Budget Group, you can compare the effects of market volatilities on Hasbro 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 Hasbro with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Avis Budget.
Diversification Opportunities for Hasbro and Avis Budget
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hasbro and Avis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc 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 Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Avis Budget go up and down completely randomly.
Pair Corralation between Hasbro and Avis Budget
Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.61 times more return on investment than Avis Budget. However, Hasbro Inc is 1.63 times less risky than Avis Budget. It trades about 0.03 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.01 per unit of risk. If you would invest 5,502 in Hasbro Inc on September 3, 2024 and sell it today you would earn a total of 1,013 from holding Hasbro Inc or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Avis Budget Group
Performance |
| Timeline |
| Hasbro Inc |
| Avis Budget Group |
Hasbro and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Avis Budget
The main advantage of trading using opposite Hasbro and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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.The idea behind Hasbro Inc and Avis Budget Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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