Correlation Between Avis Budget and Pan Global

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

Diversification Opportunities for Avis Budget and Pan Global

-0.79

Correlation Coefficient

Avis Budget  Pan Global

Pay attention - limited upside

The 3 months correlation between Avis and Pan is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources 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 Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Avis Budget i.e., Avis Budget and Pan Global go up and down completely randomly.

Pair Corralation between Avis Budget and Pan Global

Considering the 90-day investment horizon Avis Budget Group is expected to generate 0.82 times more return on investment than Pan Global. However, Avis Budget Group is 1.22 times less risky than Pan Global. It trades about 0.11 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.14 per unit of risk. If you would invest  9,643  in Avis Budget Group on September 7, 2024 and sell it today you would earn a total of  603.00  from holding Avis Budget Group or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Avis Budget Group  vs.  Pan Global Resources

Avis Budget Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 13 (%) 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.

Pan Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Global Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Avis Budget and Pan Global

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

The idea behind Avis Budget Group and Pan Global Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.