Correlation Between American Business and Avis Budget

Can any of the company-specific risk be diversified away by investing in both American Business 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 American Business and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Business Corp and Avis Budget Group, you can compare the effects of market volatilities on American Business 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 American Business with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Business and Avis Budget.

Diversification Opportunities for American Business and Avis Budget

0.0

Correlation Coefficient

American Business  Avis Budget

Pay attention - limited upside

The 3 months correlation between American and Avis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Business Corp 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 American Business 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 American Business Corp 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 American Business i.e., American Business and Avis Budget go up and down completely randomly.

Pair Corralation between American Business and Avis Budget

If you would invest  0.01  in American Business Corp on December 28, 2024 and sell it today you would earn a total of  0.00  from holding American Business Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

American Business Corp  vs.  Avis Budget Group

American Business Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, American Business is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Avis Budget Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avis Budget Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with American Business and Avis Budget

The main advantage of trading using opposite American Business and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Business 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 American Business Corp 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.