Correlation Between Avis Budget and Triton International

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

Diversification Opportunities for Avis Budget and Triton International

0.86

Correlation Coefficient

Avis Budget  Triton International

Very poor diversification

The 3 months correlation between Avis and Triton is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Avis Budget i.e., Avis Budget and Triton International go up and down completely randomly.

Pair Corralation between Avis Budget and Triton International

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Triton International. In addition to that, Avis Budget is 7.23 times more volatile than Triton International Limited. It trades about -0.2 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.04 per unit of volatility. If you would invest  1,961  in Triton International Limited on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Triton International Limited or generate 0.41% return on investment over 90 days.

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

Avis Budget Group  vs.  Triton International Limited

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.

Triton International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Avis Budget and Triton International

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

The idea behind Avis Budget Group and Triton International Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.