Correlation Between Avis Budget and Global Ship

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

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

Diversification Opportunities for Avis Budget and Global Ship

-0.55

Correlation Coefficient

Avis Budget  Global Ship

Excellent diversification

The 3 months correlation between Avis and Global is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Avis Budget 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 Avis Budget Group are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Avis Budget i.e., Avis Budget and Global Ship go up and down completely randomly.

Pair Corralation between Avis Budget and Global Ship

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Global Ship. In addition to that, Avis Budget is 7.19 times more volatile than Global Ship Lease. It trades about 0.0 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.09 per unit of volatility. If you would invest  2,522  in Global Ship Lease on December 28, 2024 and sell it today you would earn a total of  88.00  from holding Global Ship Lease or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Avis Budget Group  vs.  Global Ship Lease

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 relatively invariable basic indicators, Avis Budget is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Global Ship Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avis Budget and Global Ship

The main advantage of trading using opposite Avis Budget and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.

The idea behind Avis Budget Group and Global Ship Lease 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.