Correlation Between Turning Point and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Turning Point 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 Turning Point and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Turning Point Brands and Avis Budget Group, you can compare the effects of market volatilities on Turning Point 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 Turning Point with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Avis Budget.
Diversification Opportunities for Turning Point and Avis Budget
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Turning and Avis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands 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 Turning Point 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 Turning Point Brands 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 Turning Point i.e., Turning Point and Avis Budget go up and down completely randomly.
Pair Corralation between Turning Point and Avis Budget
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.79 times more return on investment than Avis Budget. However, Turning Point Brands is 1.27 times less risky than Avis Budget. It trades about -0.14 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.57 per unit of risk. If you would invest 6,223 in Turning Point Brands on September 27, 2024 and sell it today you would lose (323.00) from holding Turning Point Brands or give up 5.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Turning Point Brands vs. Avis Budget Group
Performance |
Timeline |
Turning Point Brands |
Avis Budget Group |
Turning Point and Avis Budget Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Turning Point and Avis Budget
The main advantage of trading using opposite Turning Point and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point 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.Turning Point vs. Universal | ||
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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