Correlation Between Willis Lease and Fortress Transp

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

Diversification Opportunities for Willis Lease and Fortress Transp

0.54

Correlation Coefficient

Willis Lease  Fortress Transp

Very weak diversification

The 3 months correlation between Willis and Fortress is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra 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 Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of Willis Lease i.e., Willis Lease and Fortress Transp go up and down completely randomly.

Pair Corralation between Willis Lease and Fortress Transp

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 0.4 times more return on investment than Fortress Transp. However, Willis Lease Finance is 2.49 times less risky than Fortress Transp. It trades about 0.03 of its potential returns per unit of risk. Fortress Transp Infra is currently generating about -0.07 per unit of risk. If you would invest  19,086  in Willis Lease Finance on November 19, 2024 and sell it today you would earn a total of  498.00  from holding Willis Lease Finance or generate 2.61% return on investment over 90 days.

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

Willis Lease Finance  vs.  Fortress Transp Infra

Willis Lease Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Willis Lease is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fortress Transp Infra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Willis Lease and Fortress Transp

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

The idea behind Willis Lease Finance and Fortress Transp Infra 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.