Correlation Between AVIS BUDGET and GOLD ROAD

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

Diversification Opportunities for AVIS BUDGET and GOLD ROAD

-0.28

Correlation Coefficient

AVIS BUDGET  GOLD ROAD

Very good diversification

The 3 months correlation between AVIS and GOLD is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AVIS BUDGET GROUP and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of AVIS BUDGET i.e., AVIS BUDGET and GOLD ROAD go up and down completely randomly.

Pair Corralation between AVIS BUDGET and GOLD ROAD

Assuming the 90 days trading horizon AVIS BUDGET GROUP is expected to under-perform the GOLD ROAD. In addition to that, AVIS BUDGET is 1.49 times more volatile than GOLD ROAD RES. It trades about -0.11 of its total potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.07 per unit of volatility. If you would invest  86.00  in GOLD ROAD RES on February 5, 2024 and sell it today you would earn a total of  9.00  from holding GOLD ROAD RES or generate 10.47% 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.  GOLD ROAD RES

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

GOLD ROAD RES

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GOLD ROAD may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with AVIS BUDGET and GOLD ROAD

The main advantage of trading using opposite AVIS BUDGET and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIS BUDGET position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.

The idea behind AVIS BUDGET GROUP and GOLD ROAD RES 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.