Correlation Between Denison Mines and Avis Budget

Can any of the company-specific risk be diversified away by investing in both Denison Mines and Avis Budget 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 Denison Mines and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Denison Mines Corp and Avis Budget Group, you can compare the effects of market volatilities on Denison Mines and Avis Budget 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 Denison Mines with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denison Mines and Avis Budget.

Diversification Opportunities for Denison Mines and Avis Budget

0.53

Correlation Coefficient

Denison Mines  Avis Budget

Very weak diversification

The 3 months correlation between Denison and Avis is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Denison Mines Corp and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group and Denison Mines 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 Denison Mines Corp are associated (or correlated) with Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Denison Mines i.e., Denison Mines and Avis Budget go up and down completely randomly.

Pair Corralation between Denison Mines and Avis Budget

Considering the 90-day investment horizon Denison Mines Corp is expected to under-perform the Avis Budget. In addition to that, Denison Mines is 1.11 times more volatile than Avis Budget Group. It trades about -0.03 of its total potential returns per unit of risk. Avis Budget Group is currently generating about 0.05 per unit of volatility. If you would invest  8,544  in Avis Budget Group on October 26, 2024 and sell it today you would earn a total of  548.00  from holding Avis Budget Group or generate 6.41% return on investment over 90 days.

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

Denison Mines Corp  vs.  Avis Budget Group

Denison Mines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Denison Mines is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Avis Budget Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 3 (%) 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.

Pair Trading with Denison Mines and Avis Budget

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

The idea behind Denison Mines Corp and Avis Budget Group 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.