Correlation Between Xponential Fitness and Avis Budget

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

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

Diversification Opportunities for Xponential Fitness and Avis Budget

0.79

Correlation Coefficient

Xponential Fitness  Avis Budget

Poor diversification

The 3 months correlation between Xponential and Avis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Avis Budget go up and down completely randomly.

Pair Corralation between Xponential Fitness and Avis Budget

Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.56 times more return on investment than Avis Budget. However, Xponential Fitness is 1.56 times more volatile than Avis Budget Group. It trades about 0.01 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.02 per unit of risk. If you would invest  2,268  in Xponential Fitness on September 21, 2024 and sell it today you would lose (889.00) from holding Xponential Fitness or give up 39.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Xponential Fitness  vs.  Avis Budget Group

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Xponential Fitness and Avis Budget

The main advantage of trading using opposite Xponential Fitness and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.