Correlation Between World Houseware and Air Lease

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

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

Diversification Opportunities for World Houseware and Air Lease

0.0

Correlation Coefficient

World Houseware  Air Lease

Pay attention - limited upside

The 3 months correlation between World and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding World Houseware Limited and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and World Houseware 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 World Houseware Limited are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of World Houseware i.e., World Houseware and Air Lease go up and down completely randomly.

Pair Corralation between World Houseware and Air Lease

If you would invest  4,705  in Air Lease on December 18, 2024 and sell it today you would lose (27.00) from holding Air Lease or give up 0.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

World Houseware Limited  vs.  Air Lease

World Houseware

Risk-Adjusted Performance

Very Weak

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

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with World Houseware and Air Lease

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

The idea behind World Houseware Limited and Air Lease 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.