Correlation Between Avis Budget and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Avis Budget and Mitsubishi UFJ 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 Mitsubishi UFJ 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 Mitsubishi UFJ Lease, you can compare the effects of market volatilities on Avis Budget and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Mitsubishi UFJ.
Diversification Opportunities for Avis Budget and Mitsubishi UFJ
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avis and Mitsubishi is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Avis Budget i.e., Avis Budget and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Avis Budget and Mitsubishi UFJ
Considering the 90-day investment horizon Avis Budget Group is expected to generate 1.11 times more return on investment than Mitsubishi UFJ. However, Avis Budget is 1.11 times more volatile than Mitsubishi UFJ Lease. It trades about 0.17 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.06 per unit of risk. If you would invest 7,452 in Avis Budget Group on September 4, 2024 and sell it today you would earn a total of 3,141 from holding Avis Budget Group or generate 42.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Avis Budget Group vs. Mitsubishi UFJ Lease
Performance |
Timeline |
Avis Budget Group |
Mitsubishi UFJ Lease |
Avis Budget and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avis Budget and Mitsubishi UFJ
The main advantage of trading using opposite Avis Budget and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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