Correlation Between Avis Budget and Stratasys

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

Diversification Opportunities for Avis Budget and Stratasys

0.52

Correlation Coefficient

Avis Budget  Stratasys

Very weak diversification

The 3 months correlation between Avis and Stratasys is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Avis Budget i.e., Avis Budget and Stratasys go up and down completely randomly.

Pair Corralation between Avis Budget and Stratasys

Considering the 90-day investment horizon Avis Budget Group is expected to generate 0.86 times more return on investment than Stratasys. However, Avis Budget Group is 1.17 times less risky than Stratasys. It trades about 0.28 of its potential returns per unit of risk. Stratasys is currently generating about -0.06 per unit of risk. If you would invest  8,142  in Avis Budget Group on October 23, 2024 and sell it today you would earn a total of  877.00  from holding Avis Budget Group or generate 10.77% return on investment over 90 days.

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

Avis Budget Group  vs.  Stratasys

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.

Stratasys

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avis Budget and Stratasys

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

The idea behind Avis Budget Group and Stratasys 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.