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

-0.74

Correlation Coefficient

Avis Budget  Global Ship

Pay attention - limited upside

The 3 months correlation between Avis and Global is -0.74. 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 2.24 times more volatile than Global Ship Lease. It trades about -0.1 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.08 per unit of volatility. If you would invest  2,157  in Global Ship Lease on December 26, 2024 and sell it today you would earn a total of  177.00  from holding Global Ship Lease or generate 8.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	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 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.

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.