Correlation Between Hertz Global and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Hertz Global 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 Hertz Global and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hertz Global Holdings and Avis Budget Group, you can compare the effects of market volatilities on Hertz Global 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 Hertz Global with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hertz Global and Avis Budget.
Diversification Opportunities for Hertz Global and Avis Budget
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hertz and Avis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings 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 Hertz Global 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 Hertz Global Holdings 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 Hertz Global i.e., Hertz Global and Avis Budget go up and down completely randomly.
Pair Corralation between Hertz Global and Avis Budget
Considering the 90-day investment horizon Hertz Global Holdings is expected to generate 1.23 times more return on investment than Avis Budget. However, Hertz Global is 1.23 times more volatile than Avis Budget Group. It trades about 0.29 of its potential returns per unit of risk. Avis Budget Group is currently generating about 0.27 per unit of risk. If you would invest 308.00 in Hertz Global Holdings on August 26, 2024 and sell it today you would earn a total of 99.00 from holding Hertz Global Holdings or generate 32.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hertz Global Holdings vs. Avis Budget Group
Performance |
| Timeline |
| Hertz Global Holdings |
| Avis Budget Group |
Hertz Global and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hertz Global and Avis Budget
The main advantage of trading using opposite Hertz Global and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global 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.| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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