Correlation Between Willis Lease and LOWES

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

Diversification Opportunities for Willis Lease and LOWES

0.28

Correlation Coefficient

Willis Lease  LOWES

Modest diversification

The 3 months correlation between Willis and LOWES is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and LOWES PANIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES PANIES INC 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES PANIES INC has no effect on the direction of Willis Lease i.e., Willis Lease and LOWES go up and down completely randomly.

Pair Corralation between Willis Lease and LOWES

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 3.14 times more return on investment than LOWES. However, Willis Lease is 3.14 times more volatile than LOWES PANIES INC. It trades about 0.04 of its potential returns per unit of risk. LOWES PANIES INC is currently generating about -0.09 per unit of risk. If you would invest  18,468  in Willis Lease Finance on October 25, 2024 and sell it today you would earn a total of  1,068  from holding Willis Lease Finance or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Willis Lease Finance  vs.  LOWES PANIES INC

Willis Lease Finance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Willis Lease may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LOWES PANIES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOWES PANIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for LOWES PANIES INC investors.

Pair Trading with Willis Lease and LOWES

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

The idea behind Willis Lease Finance and LOWES PANIES INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.