Correlation Between WILLIS LEASE and Onxeo SA

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

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

Diversification Opportunities for WILLIS LEASE and Onxeo SA

-0.21

Correlation Coefficient

WILLIS LEASE  Onxeo SA

Very good diversification

The 3 months correlation between WILLIS and Onxeo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Onxeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onxeo SA and WILLIS LEASE 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 WILLIS LEASE FIN are associated (or correlated) with Onxeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onxeo SA has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Onxeo SA go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Onxeo SA

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 0.48 times more return on investment than Onxeo SA. However, WILLIS LEASE FIN is 2.1 times less risky than Onxeo SA. It trades about 0.24 of its potential returns per unit of risk. Onxeo SA is currently generating about 0.03 per unit of risk. If you would invest  10,088  in WILLIS LEASE FIN on September 13, 2024 and sell it today you would earn a total of  8,912  from holding WILLIS LEASE FIN or generate 88.34% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  Onxeo SA

WILLIS LEASE FIN

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WILLIS LEASE reported solid returns over the last few months and may actually be approaching a breakup point.

Onxeo SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Onxeo SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Onxeo SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and Onxeo SA

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

The idea behind WILLIS LEASE FIN and Onxeo SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.