Correlation Between FTAI Aviation and Willis Lease
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation 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 FTAI Aviation and Willis Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTAI Aviation Ltd and Willis Lease Finance, you can compare the effects of market volatilities on FTAI Aviation 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 FTAI Aviation with a short position of Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Willis Lease.
Diversification Opportunities for FTAI Aviation and Willis Lease
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FTAI and Willis is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd 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 FTAI Aviation 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 FTAI Aviation Ltd 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 FTAI Aviation i.e., FTAI Aviation and Willis Lease go up and down completely randomly.
Pair Corralation between FTAI Aviation and Willis Lease
Assuming the 90 days horizon FTAI Aviation is expected to generate 6.08 times less return on investment than Willis Lease. But when comparing it to its historical volatility, FTAI Aviation Ltd is 5.22 times less risky than Willis Lease. It trades about 0.17 of its potential returns per unit of risk. Willis Lease Finance is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 14,863 in Willis Lease Finance on August 30, 2024 and sell it today you would earn a total of 6,351 from holding Willis Lease Finance or generate 42.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Willis Lease Finance
Performance |
| Timeline |
| FTAI Aviation |
| Willis Lease Finance |
FTAI Aviation and Willis Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Willis Lease
The main advantage of trading using opposite FTAI Aviation and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation 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.| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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