Correlation Between Peak Resources and AVIS BUDGET

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

Diversification Opportunities for Peak Resources and AVIS BUDGET

-0.86
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Peak and AVIS is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited 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 Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and AVIS BUDGET go up and down completely randomly.

Pair Corralation between Peak Resources and AVIS BUDGET

Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the AVIS BUDGET. In addition to that, Peak Resources is 2.24 times more volatile than AVIS BUDGET GROUP. It trades about -0.06 of its total potential returns per unit of risk. AVIS BUDGET GROUP is currently generating about 0.17 per unit of volatility. If you would invest  6,336  in AVIS BUDGET GROUP on September 6, 2024 and sell it today you would earn a total of  3,112  from holding AVIS BUDGET GROUP or generate 49.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy98.46%
ValuesDaily Returns

Peak Resources Limited  vs.  AVIS BUDGET GROUP

 Performance 
       Timeline  
Peak Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Peak Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
AVIS BUDGET GROUP 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AVIS BUDGET GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AVIS BUDGET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Peak Resources and AVIS BUDGET Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Peak Resources and AVIS BUDGET

The main advantage of trading using opposite Peak Resources and AVIS BUDGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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 Peak Resources Limited 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 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.

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