Correlation Between Orion Office and Avis Budget

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

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

Diversification Opportunities for Orion Office and Avis Budget

0.76

Correlation Coefficient

Orion Office  Avis Budget

Poor diversification

The 3 months correlation between Orion and Avis is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Orion Office Reit 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 Orion Office 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 Orion Office Reit 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 Orion Office i.e., Orion Office and Avis Budget go up and down completely randomly.

Pair Corralation between Orion Office and Avis Budget

Considering the 90-day investment horizon Orion Office Reit is expected to under-perform the Avis Budget. In addition to that, Orion Office is 1.62 times more volatile than Avis Budget Group. It trades about -0.13 of its total potential returns per unit of risk. Avis Budget Group is currently generating about -0.03 per unit of volatility. If you would invest  10,719  in Avis Budget Group on January 25, 2024 and sell it today you would lose (457.00) from holding Avis Budget Group or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Orion Office Reit  vs.  Avis Budget Group

Orion Office Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Office Reit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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

Pair Trading with Orion Office and Avis Budget

The main advantage of trading using opposite Orion Office and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Office 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 Orion Office Reit 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.