Correlation Between AVIS BUDGET and Microsoft
Can any of the company-specific risk be diversified away by investing in both AVIS BUDGET and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on AVIS BUDGET and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVIS BUDGET and Microsoft.
Diversification Opportunities for AVIS BUDGET and Microsoft
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AVIS and Microsoft is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AVIS BUDGET GROUP and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of AVIS BUDGET i.e., AVIS BUDGET and Microsoft go up and down completely randomly.
Pair Corralation between AVIS BUDGET and Microsoft
Assuming the 90 days trading horizon AVIS BUDGET GROUP is expected to under-perform the Microsoft. In addition to that, AVIS BUDGET is 2.4 times more volatile than Microsoft. It trades about -0.13 of its total potential returns per unit of risk. Microsoft is currently generating about -0.13 per unit of volatility. If you would invest 39,010 in Microsoft on January 20, 2024 and sell it today you would lose (1,040) from holding Microsoft or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVIS BUDGET GROUP vs. Microsoft
Performance |
| Timeline |
| AVIS BUDGET GROUP |
| Microsoft |
AVIS BUDGET and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVIS BUDGET and Microsoft
The main advantage of trading using opposite AVIS BUDGET and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIS BUDGET position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| AVIS BUDGET vs. GigaMedia | AVIS BUDGET vs. MOLSON RS BEVERAGE | AVIS BUDGET vs. COMMERCIAL VEHICLE | AVIS BUDGET vs. BRAGG GAMING GRP |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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