Correlation Between Avis Budget and 532457BZ0

Can any of the company-specific risk be diversified away by investing in both Avis Budget and 532457BZ0 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 532457BZ0 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 ELI LILLY AND, you can compare the effects of market volatilities on Avis Budget and 532457BZ0 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 532457BZ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and 532457BZ0.

Diversification Opportunities for Avis Budget and 532457BZ0

0.01

Correlation Coefficient

Avis Budget  532457BZ0

Significant diversification

The 3 months correlation between Avis and 532457BZ0 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BZ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Avis Budget i.e., Avis Budget and 532457BZ0 go up and down completely randomly.

Pair Corralation between Avis Budget and 532457BZ0

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the 532457BZ0. In addition to that, Avis Budget is 2.29 times more volatile than ELI LILLY AND. It trades about -0.03 of its total potential returns per unit of risk. ELI LILLY AND is currently generating about -0.01 per unit of volatility. If you would invest  6,491  in ELI LILLY AND on October 25, 2024 and sell it today you would lose (548.00) from holding ELI LILLY AND or give up 8.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.16%
Values	Daily Returns

Avis Budget Group  vs.  ELI LILLY AND

Avis Budget Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 5 (%) 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.

ELI LILLY AND

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ELI LILLY AND are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 532457BZ0 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Avis Budget and 532457BZ0

The main advantage of trading using opposite Avis Budget and 532457BZ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, 532457BZ0 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 532457BZ0 will offset losses from the drop in 532457BZ0's long position.

The idea behind Avis Budget Group and ELI LILLY AND 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.