Correlation Between Avis Budget and Comtech Telecommunicatio

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

Diversification Opportunities for Avis Budget and Comtech Telecommunicatio

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Avis Budget and Comtech is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio 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 Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of Avis Budget i.e., Avis Budget and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between Avis Budget and Comtech Telecommunicatio

Considering the 90-day investment horizon Avis Budget Group is expected to under-perform the Comtech Telecommunicatio. In addition to that, Avis Budget is 1.3 times more volatile than Comtech Telecommunications Corp. It trades about -0.05 of its total potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about 0.27 per unit of volatility. If you would invest  1,254  in Comtech Telecommunications Corp on November 2, 2022 and sell it today you would earn a total of  332.00  from holding Comtech Telecommunications Corp or generate 26.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Avis Budget Group  vs.  Comtech Telecommunications Cor

 Performance (%) 
       Timeline  
Avis Budget Group 
Avis Budget Performance
0 of 100
Over the last 90 days Avis Budget Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Avis Budget Price Channel

Comtech Telecommunicatio 
Comtech Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Comtech Telecommunicatio revealed solid returns over the last few months and may actually be approaching a breakup point.

Comtech Price Channel

Avis Budget and Comtech Telecommunicatio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avis Budget and Comtech Telecommunicatio

The main advantage of trading using opposite Avis Budget and Comtech Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Comtech Telecommunicatio 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 Comtech Telecommunicatio will offset losses from the drop in Comtech Telecommunicatio's long position.
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The idea behind Avis Budget Group and Comtech Telecommunications Corp 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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