Correlation Between KAUFMAN ET and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and WILLIS LEASE 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 KAUFMAN ET and WILLIS LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and WILLIS LEASE FIN, you can compare the effects of market volatilities on KAUFMAN ET and WILLIS LEASE 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 KAUFMAN ET with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and WILLIS LEASE.
Diversification Opportunities for KAUFMAN ET and WILLIS LEASE
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAUFMAN and WILLIS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and WILLIS LEASE go up and down completely randomly.
Pair Corralation between KAUFMAN ET and WILLIS LEASE
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to under-perform the WILLIS LEASE. But the stock apears to be less risky and, when comparing its historical volatility, KAUFMAN ET BROAD is 4.45 times less risky than WILLIS LEASE. The stock trades about -0.31 of its potential returns per unit of risk. The WILLIS LEASE FIN is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 16,680 in WILLIS LEASE FIN on August 30, 2024 and sell it today you would earn a total of 2,620 from holding WILLIS LEASE FIN or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. WILLIS LEASE FIN
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| WILLIS LEASE FIN |
KAUFMAN ET and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and WILLIS LEASE
The main advantage of trading using opposite KAUFMAN ET and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, WILLIS LEASE 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 WILLIS LEASE will offset losses from the drop in WILLIS LEASE's long position.| KAUFMAN ET vs. Apple Inc | KAUFMAN ET vs. Apple Inc | KAUFMAN ET vs. Superior Plus Corp | KAUFMAN ET vs. SIVERS SEMICONDUCTORS AB |
| WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. SIVERS SEMICONDUCTORS AB | WILLIS LEASE vs. Talanx AG | WILLIS LEASE vs. 2G ENERGY |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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