Correlation Between Avis Budget and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both Avis Budget and AerCap Holdings 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 AerCap Holdings 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 AerCap Holdings NV, you can compare the effects of market volatilities on Avis Budget and AerCap Holdings 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 AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and AerCap Holdings.
Diversification Opportunities for Avis Budget and AerCap Holdings
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avis and AerCap is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV 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 AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of Avis Budget i.e., Avis Budget and AerCap Holdings go up and down completely randomly.
Pair Corralation between Avis Budget and AerCap Holdings
Considering the 90-day investment horizon Avis Budget is expected to generate 6.47 times less return on investment than AerCap Holdings. In addition to that, Avis Budget is 3.94 times more volatile than AerCap Holdings NV. It trades about 0.01 of its total potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.28 per unit of volatility. If you would invest 8,406 in AerCap Holdings NV on February 11, 2024 and sell it today you would earn a total of 711.00 from holding AerCap Holdings NV or generate 8.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Avis Budget Group vs. AerCap Holdings NV
Performance |
Timeline |
Avis Budget Group |
AerCap Holdings NV |
Avis Budget and AerCap Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avis Budget and AerCap Holdings
The main advantage of trading using opposite Avis Budget and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
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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 the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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