Correlation Between Willis Lease and INGERSOLL

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

Diversification Opportunities for Willis Lease and INGERSOLL

-0.36

Correlation Coefficient

Willis Lease  INGERSOLL

Very good diversification

The 3 months correlation between Willis and INGERSOLL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Willis Lease i.e., Willis Lease and INGERSOLL go up and down completely randomly.

Pair Corralation between Willis Lease and INGERSOLL

Given the investment horizon of 90 days Willis Lease Finance is expected to under-perform the INGERSOLL. In addition to that, Willis Lease is 8.63 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about -0.04 of its total potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about -0.07 per unit of volatility. If you would invest  9,626  in INGERSOLL RAND GLOBAL HLDG on December 24, 2024 and sell it today you would lose (174.00) from holding INGERSOLL RAND GLOBAL HLDG or give up 1.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Willis Lease Finance  vs.  INGERSOLL RAND GLOBAL HLDG

Willis Lease Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willis Lease Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willis Lease and INGERSOLL

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

The idea behind Willis Lease Finance and INGERSOLL RAND GLOBAL HLDG 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 Anywhere module to track or share privately all of your investments from the convenience of any device.