Correlation Between First Business and Willis Lease
Can any of the company-specific risk be diversified away by investing in both First Business 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 First Business and Willis Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Business Financial and Willis Lease Finance, you can compare the effects of market volatilities on First Business 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 First Business with a short position of Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Business and Willis Lease.
Diversification Opportunities for First Business and Willis Lease
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Willis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Business Financial and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance and First Business 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 First Business Financial 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 Finance has no effect on the direction of First Business i.e., First Business and Willis Lease go up and down completely randomly.
Pair Corralation between First Business and Willis Lease
Given the investment horizon of 90 days First Business is expected to generate 3.01 times less return on investment than Willis Lease. But when comparing it to its historical volatility, First Business Financial is 1.5 times less risky than Willis Lease. It trades about 0.09 of its potential returns per unit of risk. Willis Lease Finance is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,504 in Willis Lease Finance on November 9, 2024 and sell it today you would earn a total of 15,662 from holding Willis Lease Finance or generate 347.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Business Financial vs. Willis Lease Finance
Performance |
| Timeline |
| First Business Financial |
| Willis Lease Finance |
First Business and Willis Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Business and Willis Lease
The main advantage of trading using opposite First Business and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Business 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.| First Business vs. Home Federal Bancorp | First Business vs. Lake Shore Bancorp | First Business vs. Old Point Financial | First Business vs. Parke Bancorp |
| Willis Lease vs. Custom Truck One | Willis Lease vs. GATX Corporation | Willis Lease vs. HE Equipment Services | Willis Lease vs. Alta Equipment Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world |