Correlation Between AVIS BUDGET and Amazon
Can any of the company-specific risk be diversified away by investing in both AVIS BUDGET and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on AVIS BUDGET and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVIS BUDGET and Amazon.
Diversification Opportunities for AVIS BUDGET and Amazon
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AVIS and Amazon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding AVIS BUDGET GROUP and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of AVIS BUDGET i.e., AVIS BUDGET and Amazon go up and down completely randomly.
Pair Corralation between AVIS BUDGET and Amazon
Assuming the 90 days trading horizon AVIS BUDGET GROUP is expected to under-perform the Amazon. In addition to that, AVIS BUDGET is 2.04 times more volatile than Amazon Inc. It trades about -0.18 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.01 per unit of volatility. If you would invest 16,640 in Amazon Inc on January 24, 2024 and sell it today you would earn a total of 10.00 from holding Amazon Inc or generate 0.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AVIS BUDGET GROUP vs. Amazon Inc
Performance |
Timeline |
AVIS BUDGET GROUP |
Amazon Inc |
AVIS BUDGET and Amazon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AVIS BUDGET and Amazon
The main advantage of trading using opposite AVIS BUDGET and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIS BUDGET position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.AVIS BUDGET vs. AUSTEVOLL SEAFOOD | AVIS BUDGET vs. PT Indofood Sukses | AVIS BUDGET vs. AGRICULTBK HADR25 YC | AVIS BUDGET vs. CONAGRA FOODS |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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