Correlation Between PROG Holdings and Willis Lease

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

By analyzing existing cross correlation between PROG Holdings and Willis Lease Finance, you can compare the effects of market volatilities on PROG Holdings 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 PROG Holdings with a short position of Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROG Holdings and Willis Lease.

Diversification Opportunities for PROG Holdings and Willis Lease

0.66

Correlation Coefficient

PROG Holdings  Willis Lease

Poor diversification

The 3 months correlation between PROG and Willis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance and PROG Holdings 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 PROG Holdings 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 Finance has no effect on the direction of PROG Holdings i.e., PROG Holdings and Willis Lease go up and down completely randomly.

Pair Corralation between PROG Holdings and Willis Lease

Considering the 90-day investment horizon PROG Holdings is expected to under-perform the Willis Lease. In addition to that, PROG Holdings is 1.2 times more volatile than Willis Lease Finance. It trades about -0.14 of its total potential returns per unit of risk. Willis Lease Finance is currently generating about -0.06 per unit of volatility. If you would invest  20,174  in Willis Lease Finance on December 27, 2024 and sell it today you would lose (3,128) from holding Willis Lease Finance or give up 15.51% of portfolio value over 90 days.

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

PROG Holdings  vs.  Willis Lease Finance

PROG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Willis Lease Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willis Lease Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PROG Holdings and Willis Lease

The main advantage of trading using opposite PROG Holdings and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROG Holdings 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 PROG Holdings and Willis Lease Finance 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.