Correlation Between Willis Lease and Ainsworth Game

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

By analyzing existing cross correlation between Willis Lease Finance and Ainsworth Game Technology, you can compare the effects of market volatilities on Willis Lease and Ainsworth Game 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 Ainsworth Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Ainsworth Game.

Diversification Opportunities for Willis Lease and Ainsworth Game

0.11

Correlation Coefficient

Willis Lease  Ainsworth Game

Average diversification

The 3 months correlation between Willis and Ainsworth is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology 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 Finance are associated (or correlated) with Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of Willis Lease i.e., Willis Lease and Ainsworth Game go up and down completely randomly.

Pair Corralation between Willis Lease and Ainsworth Game

Given the investment horizon of 90 days Willis Lease Finance is expected to under-perform the Ainsworth Game. But the stock apears to be less risky and, when comparing its historical volatility, Willis Lease Finance is 1.59 times less risky than Ainsworth Game. The stock trades about -0.05 of its potential returns per unit of risk. The Ainsworth Game Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Ainsworth Game Technology on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Ainsworth Game Technology or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Willis Lease Finance  vs.  Ainsworth Game Technology

Willis Lease Finance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Willis Lease and Ainsworth Game

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

The idea behind Willis Lease Finance and Ainsworth Game Technology 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 CEOs Directory module to screen CEOs from public companies around the world.