Correlation Between Apple and AVIS BUDGET

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

By analyzing existing cross correlation between Apple Inc and AVIS BUDGET GROUP, you can compare the effects of market volatilities on Apple 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 Apple with a short position of AVIS BUDGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AVIS BUDGET.

Diversification Opportunities for Apple and AVIS BUDGET

0.68

Correlation Coefficient

Apple  AVIS BUDGET

Poor diversification

The 3 months correlation between Apple and AVIS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and AVIS BUDGET go up and down completely randomly.

Pair Corralation between Apple and AVIS BUDGET

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.45 times more return on investment than AVIS BUDGET. However, Apple Inc is 2.24 times less risky than AVIS BUDGET. It trades about 0.09 of its potential returns per unit of risk. AVIS BUDGET GROUP is currently generating about -0.01 per unit of risk. If you would invest  12,543  in Apple Inc on September 12, 2024 and sell it today you would earn a total of  10,952  from holding Apple Inc or generate 87.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  AVIS BUDGET GROUP

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

AVIS BUDGET GROUP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AVIS BUDGET GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AVIS BUDGET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and AVIS BUDGET

The main advantage of trading using opposite Apple and AVIS BUDGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.