Correlation Between Grupo Carso and Avis Budget

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

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

Diversification Opportunities for Grupo Carso and Avis Budget

0.03

Correlation Coefficient

Grupo Carso  Avis Budget

Significant diversification

The 3 months correlation between Grupo and Avis is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB 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 Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and Avis Budget go up and down completely randomly.

Pair Corralation between Grupo Carso and Avis Budget

Assuming the 90 days trading horizon Grupo Carso SAB is expected to generate 0.85 times more return on investment than Avis Budget. However, Grupo Carso SAB is 1.17 times less risky than Avis Budget. It trades about -0.01 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.03 per unit of risk. If you would invest  13,617  in Grupo Carso SAB on September 14, 2024 and sell it today you would lose (1,990) from holding Grupo Carso SAB or give up 14.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Carso SAB  vs.  Avis Budget Group

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Avis Budget Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Avis Budget may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Carso and Avis Budget

The main advantage of trading using opposite Grupo Carso and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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 Grupo Carso SAB 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.