Correlation Between WILLIS LEASE and Air Lease
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Air 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 WILLIS LEASE and Air Lease 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 Air Lease, you can compare the effects of market volatilities on WILLIS LEASE and Air 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 WILLIS LEASE with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Air Lease.
Diversification Opportunities for WILLIS LEASE and Air Lease
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WILLIS and Air is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Air Lease go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Air Lease
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.83 times more return on investment than Air Lease. However, WILLIS LEASE is 1.83 times more volatile than Air Lease. It trades about 0.23 of its potential returns per unit of risk. Air Lease is currently generating about 0.09 per unit of risk. If you would invest 4,330 in WILLIS LEASE FIN on August 27, 2024 and sell it today you would earn a total of 14,270 from holding WILLIS LEASE FIN or generate 329.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Air Lease
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Air Lease |
WILLIS LEASE and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Air Lease
The main advantage of trading using opposite WILLIS LEASE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Air 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 Air Lease will offset losses from the drop in Air Lease's long position.| WILLIS LEASE vs. United Rentals | WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. NMI Holdings | WILLIS LEASE vs. Origin Agritech |
| Air Lease vs. United Rentals | Air Lease vs. Superior Plus Corp | Air Lease vs. NMI Holdings | Air Lease vs. Origin Agritech |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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