Correlation Between Avis Budget and Roblox Corp

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

Diversification Opportunities for Avis Budget and Roblox Corp

0.18

Correlation Coefficient

Avis Budget  Roblox Corp

Average diversification

The 3 months correlation between Avis and Roblox is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Roblox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roblox 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 Roblox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roblox Corp has no effect on the direction of Avis Budget i.e., Avis Budget and Roblox Corp go up and down completely randomly.

Pair Corralation between Avis Budget and Roblox Corp

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Roblox Corp. In addition to that, Avis Budget is 1.12 times more volatile than Roblox Corp. It trades about -0.09 of its total potential returns per unit of risk. Roblox Corp is currently generating about 0.14 per unit of volatility. If you would invest  5,456  in Roblox Corp on October 11, 2024 and sell it today you would earn a total of  749.00  from holding Roblox Corp or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Avis Budget Group  vs.  Roblox Corp

Avis Budget Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Avis Budget may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Roblox Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Roblox Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Roblox Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avis Budget and Roblox Corp

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

The idea behind Avis Budget Group and Roblox 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.