Correlation Between Stanley Black and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both Stanley Black 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 Stanley Black and WILLIS LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Black Decker and WILLIS LEASE FIN, you can compare the effects of market volatilities on Stanley Black 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 Stanley Black with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Black and WILLIS LEASE.
Diversification Opportunities for Stanley Black and WILLIS LEASE
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stanley and WILLIS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Black Decker 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 Stanley Black 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 Stanley Black Decker 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 Stanley Black i.e., Stanley Black and WILLIS LEASE go up and down completely randomly.
Pair Corralation between Stanley Black and WILLIS LEASE
Assuming the 90 days horizon Stanley Black is expected to generate 4.86 times less return on investment than WILLIS LEASE. But when comparing it to its historical volatility, Stanley Black Decker is 1.36 times less risky than WILLIS LEASE. It trades about 0.03 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,437 in WILLIS LEASE FIN on September 2, 2024 and sell it today you would earn a total of 14,163 from holding WILLIS LEASE FIN or generate 260.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Black Decker vs. WILLIS LEASE FIN
Performance |
| Timeline |
| Stanley Black Decker |
| WILLIS LEASE FIN |
Stanley Black and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Black and WILLIS LEASE
The main advantage of trading using opposite Stanley Black and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Black 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.| Stanley Black vs. WILLIS LEASE FIN | Stanley Black vs. United Utilities Group | Stanley Black vs. STORE ELECTRONIC | Stanley Black vs. LG Electronics |
| WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. NMI Holdings | WILLIS LEASE vs. Origin Agritech | WILLIS LEASE vs. SIVERS SEMICONDUCTORS AB |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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