Correlation Between Avis Budget and Bird Global

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Can any of the company-specific risk be diversified away by investing in both Avis Budget and Bird Global 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 Bird Global 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 Bird Global, you can compare the effects of market volatilities on Avis Budget and Bird Global 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 Bird Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Bird Global.

Diversification Opportunities for Avis Budget and Bird Global

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Avis and Bird is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Bird Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Global 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 Bird Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Global has no effect on the direction of Avis Budget i.e., Avis Budget and Bird Global go up and down completely randomly.

Pair Corralation between Avis Budget and Bird Global

If you would invest  10,793  in Avis Budget Group on December 30, 2023 and sell it today you would earn a total of  1,453  from holding Avis Budget Group or generate 13.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.55%
ValuesDaily Returns

Avis Budget Group  vs.  Bird Global

 Performance 
       Timeline  
Avis Budget Group 

Risk-Adjusted Performance

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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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Bird Global 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
OK
Over the last 90 days Bird Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile fundamental indicators, Bird Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Avis Budget and Bird Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avis Budget and Bird Global

The main advantage of trading using opposite Avis Budget and Bird Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Bird Global 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 Bird Global will offset losses from the drop in Bird Global's long position.
The idea behind Avis Budget Group and Bird Global 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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