Correlation Between Avis Budget and Lord Global

Can any of the company-specific risk be diversified away by investing in both Avis Budget and Lord Global 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 Lord Global 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 Lord Global Corp, you can compare the effects of market volatilities on Avis Budget and Lord Global 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 Lord Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Lord Global.

Diversification Opportunities for Avis Budget and Lord Global

0.0

Correlation Coefficient

Avis Budget  Lord Global

Pay attention - limited upside

The 3 months correlation between Avis and Lord is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Lord Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Global Corp 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 Lord Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Global Corp has no effect on the direction of Avis Budget i.e., Avis Budget and Lord Global go up and down completely randomly.

Pair Corralation between Avis Budget and Lord Global

If you would invest  7,947  in Avis Budget Group on October 20, 2024 and sell it today you would earn a total of  1,072  from holding Avis Budget Group or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Avis Budget Group  vs.  Lord Global Corp

Avis Budget Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Avis Budget reported solid returns over the last few months and may actually be approaching a breakup point.

Lord Global Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lord Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Avis Budget and Lord Global

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

The idea behind Avis Budget Group and Lord Global Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.