Correlation Between 824348BP0 and Willis Lease

Can any of the company-specific risk be diversified away by investing in both 824348BP0 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 824348BP0 and Willis Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHW 29 15 MAR 52 and Willis Lease Finance, you can compare the effects of market volatilities on 824348BP0 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 824348BP0 with a short position of Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of 824348BP0 and Willis Lease.

Diversification Opportunities for 824348BP0 and Willis Lease

0.21

Correlation Coefficient

824348BP0  Willis Lease

Modest diversification

The 3 months correlation between 824348BP0 and Willis is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SHW 29 15 MAR 52 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 824348BP0 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 SHW 29 15 MAR 52 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 824348BP0 i.e., 824348BP0 and Willis Lease go up and down completely randomly.

Pair Corralation between 824348BP0 and Willis Lease

Assuming the 90 days trading horizon SHW 29 15 MAR 52 is expected to generate 0.67 times more return on investment than Willis Lease. However, SHW 29 15 MAR 52 is 1.5 times less risky than Willis Lease. It trades about -0.03 of its potential returns per unit of risk. Willis Lease Finance is currently generating about -0.03 per unit of risk. If you would invest  6,104  in SHW 29 15 MAR 52 on December 22, 2024 and sell it today you would lose (329.00) from holding SHW 29 15 MAR 52 or give up 5.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

SHW 29 15 MAR 52  vs.  Willis Lease Finance

SHW 29 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days SHW 29 15 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 824348BP0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with 824348BP0 and Willis Lease

The main advantage of trading using opposite 824348BP0 and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 824348BP0 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 SHW 29 15 MAR 52 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.