Correlation Between HEMISPHERE EGY and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both HEMISPHERE EGY 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 HEMISPHERE EGY and WILLIS LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEMISPHERE EGY and WILLIS LEASE FIN, you can compare the effects of market volatilities on HEMISPHERE EGY 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 HEMISPHERE EGY with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEMISPHERE EGY and WILLIS LEASE.
Diversification Opportunities for HEMISPHERE EGY and WILLIS LEASE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEMISPHERE and WILLIS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY i.e., HEMISPHERE EGY and WILLIS LEASE go up and down completely randomly.
Pair Corralation between HEMISPHERE EGY and WILLIS LEASE
Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 1.47 times less return on investment than WILLIS LEASE. But when comparing it to its historical volatility, HEMISPHERE EGY is 3.53 times less risky than WILLIS LEASE. It trades about 0.2 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16,580 in WILLIS LEASE FIN on August 25, 2024 and sell it today you would earn a total of 1,220 from holding WILLIS LEASE FIN or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HEMISPHERE EGY vs. WILLIS LEASE FIN
Performance |
| Timeline |
| HEMISPHERE EGY |
| WILLIS LEASE FIN |
HEMISPHERE EGY and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEMISPHERE EGY and WILLIS LEASE
The main advantage of trading using opposite HEMISPHERE EGY and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEMISPHERE EGY 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.| HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc |
| WILLIS LEASE vs. QBE Insurance Group | WILLIS LEASE vs. KRISPY KREME DL 01 | WILLIS LEASE vs. MSAD INSURANCE | WILLIS LEASE vs. HEMISPHERE EGY |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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