Correlation Between Avis Budget and Uber Technologies

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

Diversification Opportunities for Avis Budget and Uber Technologies

-0.13

Correlation Coefficient

Avis Budget  Uber Technologies

Good diversification

The 3 months correlation between Avis and Uber is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Avis Budget i.e., Avis Budget and Uber Technologies go up and down completely randomly.

Pair Corralation between Avis Budget and Uber Technologies

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Uber Technologies. In addition to that, Avis Budget is 1.11 times more volatile than Uber Technologies. It trades about -0.13 of its total potential returns per unit of risk. Uber Technologies is currently generating about -0.13 per unit of volatility. If you would invest  7,436  in Uber Technologies on October 7, 2024 and sell it today you would lose (977.00) from holding Uber Technologies or give up 13.14% of portfolio value over 90 days.

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

Avis Budget Group  vs.  Uber Technologies

Avis Budget Group

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Avis Budget is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Avis Budget and Uber Technologies

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

The idea behind Avis Budget Group and Uber Technologies 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.