Correlation Between Fortress Transportation and Avis Budget

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Can any of the company-specific risk be diversified away by investing in both Fortress Transportation 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 Fortress Transportation and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Transportation and and Avis Budget Group, you can compare the effects of market volatilities on Fortress Transportation 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 Fortress Transportation with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Transportation and Avis Budget.

Diversification Opportunities for Fortress Transportation and Avis Budget

FortressAvisDiversified AwayFortressAvisDiversified Away100%
-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Fortress and Avis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and 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 Fortress Transportation 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 Fortress Transportation and 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 Fortress Transportation i.e., Fortress Transportation and Avis Budget go up and down completely randomly.

Pair Corralation between Fortress Transportation and Avis Budget

Assuming the 90 days horizon Fortress Transportation and is expected to under-perform the Avis Budget. But the stock apears to be less risky and, when comparing its historical volatility, Fortress Transportation and is 7.79 times less risky than Avis Budget. The stock trades about -0.13 of its potential returns per unit of risk. The Avis Budget Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,947  in Avis Budget Group on September 21, 2024 and sell it today you would earn a total of  147.00  from holding Avis Budget Group or generate 1.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Fortress Transportation and  vs.  Avis Budget Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510152025
JavaScript chart by amCharts 3.21.15FTAIO CAR
       Timeline  
Fortress Transportation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fortress Transportation and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Fortress Transportation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec24.82525.225.425.625.826
Avis Budget Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec80859095100105110

Fortress Transportation and Avis Budget Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.43-1.05-0.67-0.290.0061310.310.691.071.45 0.51.01.5
JavaScript chart by amCharts 3.21.15FTAIO CAR
       Returns  

Pair Trading with Fortress Transportation and Avis Budget

The main advantage of trading using opposite Fortress Transportation and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transportation 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 Fortress Transportation and 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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