Correlation Between WILLIS LEASE and Equinix

Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Equinix 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 Equinix 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 Equinix, you can compare the effects of market volatilities on WILLIS LEASE and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Equinix.

Diversification Opportunities for WILLIS LEASE and Equinix

0.73

Correlation Coefficient

WILLIS LEASE  Equinix

Poor diversification

The 3 months correlation between WILLIS and Equinix is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Equinix go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Equinix

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 2.45 times more return on investment than Equinix. However, WILLIS LEASE is 2.45 times more volatile than Equinix. It trades about 0.07 of its potential returns per unit of risk. Equinix is currently generating about 0.08 per unit of risk. If you would invest  16,580  in WILLIS LEASE FIN on October 25, 2024 and sell it today you would earn a total of  2,020  from holding WILLIS LEASE FIN or generate 12.18% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  Equinix

WILLIS LEASE FIN

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 5 (%) 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.

Equinix

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WILLIS LEASE and Equinix

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

The idea behind WILLIS LEASE FIN and Equinix 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.