Correlation Between WILLIS LEASE and SEI INVESTMENTS

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

Diversification Opportunities for WILLIS LEASE and SEI INVESTMENTS

-0.04

Correlation Coefficient

WILLIS LEASE  SEI INVESTMENTS

Good diversification

The 3 months correlation between WILLIS and SEI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and SEI INVESTMENTS go up and down completely randomly.

Pair Corralation between WILLIS LEASE and SEI INVESTMENTS

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 3.22 times more return on investment than SEI INVESTMENTS. However, WILLIS LEASE is 3.22 times more volatile than SEI INVESTMENTS. It trades about 0.1 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.09 per unit of risk. If you would invest  5,288  in WILLIS LEASE FIN on December 4, 2024 and sell it today you would earn a total of  13,712  from holding WILLIS LEASE FIN or generate 259.3% 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.  SEI INVESTMENTS

WILLIS LEASE FIN

Risk-Adjusted Performance

Very Weak

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

SEI INVESTMENTS

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SEI INVESTMENTS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WILLIS LEASE and SEI INVESTMENTS

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

The idea behind WILLIS LEASE FIN and SEI INVESTMENTS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.