Correlation Between Willis Lease and UNITEDHEALTH

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

Diversification Opportunities for Willis Lease and UNITEDHEALTH

-0.48

Correlation Coefficient

Willis Lease  UNITEDHEALTH

Very good diversification

The 3 months correlation between Willis and UNITEDHEALTH is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP 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 UNITEDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITEDHEALTH GROUP INC has no effect on the direction of Willis Lease i.e., Willis Lease and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Willis Lease and UNITEDHEALTH

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 4.69 times more return on investment than UNITEDHEALTH. However, Willis Lease is 4.69 times more volatile than UNITEDHEALTH GROUP INC. It trades about 0.13 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about -0.09 per unit of risk. If you would invest  16,030  in Willis Lease Finance on October 9, 2024 and sell it today you would earn a total of  5,371  from holding Willis Lease Finance or generate 33.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Willis Lease Finance  vs.  UNITEDHEALTH GROUP INC

Willis Lease Finance

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 10 (%) 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.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITEDHEALTH 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 UNITEDHEALTH

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

The idea behind Willis Lease Finance and UNITEDHEALTH GROUP 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.