Correlation Between WILLIS LEASE and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and PLAYMATES TOYS 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 WILLIS LEASE and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WILLIS LEASE FIN and PLAYMATES TOYS, you can compare the effects of market volatilities on WILLIS LEASE and PLAYMATES TOYS 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 WILLIS LEASE with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and PLAYMATES TOYS.
Diversification Opportunities for WILLIS LEASE and PLAYMATES TOYS
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WILLIS and PLAYMATES is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and WILLIS LEASE 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 WILLIS LEASE FIN are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between WILLIS LEASE and PLAYMATES TOYS
Assuming the 90 days horizon WILLIS LEASE FIN is expected to under-perform the PLAYMATES TOYS. But the stock apears to be less risky and, when comparing its historical volatility, WILLIS LEASE FIN is 2.63 times less risky than PLAYMATES TOYS. The stock trades about -0.07 of its potential returns per unit of risk. The PLAYMATES TOYS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6.90 in PLAYMATES TOYS on October 23, 2024 and sell it today you would lose (0.15) from holding PLAYMATES TOYS or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. PLAYMATES TOYS
Performance |
| Timeline |
| WILLIS LEASE FIN |
| PLAYMATES TOYS |
WILLIS LEASE and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and PLAYMATES TOYS
The main advantage of trading using opposite WILLIS LEASE and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.| WILLIS LEASE vs. United Insurance Holdings | WILLIS LEASE vs. UNIQA INSURANCE GR | WILLIS LEASE vs. BW OFFSHORE LTD | WILLIS LEASE vs. ONWARD MEDICAL BV |
| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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