Correlation Between WILLIS LEASE and Varta AG

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

Diversification Opportunities for WILLIS LEASE and Varta AG

-0.66

Correlation Coefficient

WILLIS LEASE  Varta AG

Excellent diversification

The 3 months correlation between WILLIS and Varta is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Varta AG go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Varta AG

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 0.17 times more return on investment than Varta AG. However, WILLIS LEASE FIN is 5.72 times less risky than Varta AG. It trades about -0.1 of its potential returns per unit of risk. Varta AG is currently generating about -0.2 per unit of risk. If you would invest  19,200  in WILLIS LEASE FIN on October 26, 2024 and sell it today you would lose (900.00) from holding WILLIS LEASE FIN or give up 4.69% of portfolio value over 90 days.

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

WILLIS LEASE FIN  vs.  Varta AG

WILLIS LEASE FIN

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 3 (%) 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.

Varta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WILLIS LEASE and Varta AG

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

The idea behind WILLIS LEASE FIN and Varta AG 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.