Correlation Between Willis Lease and Fortress Transportation

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

Diversification Opportunities for Willis Lease and Fortress Transportation

-0.07

Correlation Coefficient

Willis Lease  Fortress Transportation

Good diversification

The 3 months correlation between Willis and Fortress is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Fortress Transportation and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transportation 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 Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transportation has no effect on the direction of Willis Lease i.e., Willis Lease and Fortress Transportation go up and down completely randomly.

Pair Corralation between Willis Lease and Fortress Transportation

Given the investment horizon of 90 days Willis Lease Finance is expected to under-perform the Fortress Transportation. In addition to that, Willis Lease is 7.38 times more volatile than Fortress Transportation and. It trades about -0.01 of its total potential returns per unit of risk. Fortress Transportation and is currently generating about 0.12 per unit of volatility. If you would invest  2,494  in Fortress Transportation and on September 12, 2024 and sell it today you would earn a total of  18.00  from holding Fortress Transportation and or generate 0.72% return on investment over 90 days.

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

Willis Lease Finance  vs.  Fortress Transportation and

Willis Lease Finance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 19 (%) 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.

Fortress Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Transportation and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Fortress Transportation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Willis Lease and Fortress Transportation

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

The idea behind Willis Lease Finance and Fortress Transportation and 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.