Correlation Between ELEMENT FLEET and WILLIS LEASE

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

By analyzing existing cross correlation between ELEMENT FLEET MGMT and WILLIS LEASE FIN, you can compare the effects of market volatilities on ELEMENT FLEET and WILLIS LEASE 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 ELEMENT FLEET with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELEMENT FLEET and WILLIS LEASE.

Diversification Opportunities for ELEMENT FLEET and WILLIS LEASE

0.57

Correlation Coefficient

ELEMENT FLEET  WILLIS LEASE

Very weak diversification

The 3 months correlation between ELEMENT and WILLIS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ELEMENT FLEET MGMT and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN and ELEMENT FLEET 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 ELEMENT FLEET MGMT are associated (or correlated) with WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of ELEMENT FLEET i.e., ELEMENT FLEET and WILLIS LEASE go up and down completely randomly.

Pair Corralation between ELEMENT FLEET and WILLIS LEASE

Assuming the 90 days horizon ELEMENT FLEET MGMT is expected to generate 0.45 times more return on investment than WILLIS LEASE. However, ELEMENT FLEET MGMT is 2.23 times less risky than WILLIS LEASE. It trades about 0.0 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about -0.08 per unit of risk. If you would invest  1,877  in ELEMENT FLEET MGMT on December 30, 2024 and sell it today you would lose (7.00) from holding ELEMENT FLEET MGMT or give up 0.37% of portfolio value over 90 days.

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

ELEMENT FLEET MGMT  vs.  WILLIS LEASE FIN

ELEMENT FLEET MGMT

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELEMENT FLEET MGMT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ELEMENT FLEET is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WILLIS LEASE FIN

Risk-Adjusted Performance

Very Weak

Over the last 90 days WILLIS LEASE FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ELEMENT FLEET and WILLIS LEASE

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

The idea behind ELEMENT FLEET MGMT and WILLIS LEASE FIN 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.