Correlation Between WILLIS LEASE and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL, you can compare the effects of market volatilities on WILLIS LEASE and BLUESCOPE STEEL 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 BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and BLUESCOPE STEEL.
Diversification Opportunities for WILLIS LEASE and BLUESCOPE STEEL
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between WILLIS and BLUESCOPE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL 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 BLUESCOPE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUESCOPE STEEL has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between WILLIS LEASE and BLUESCOPE STEEL
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.56 times more return on investment than BLUESCOPE STEEL. However, WILLIS LEASE is 1.56 times more volatile than BLUESCOPE STEEL. It trades about 0.09 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about -0.2 per unit of risk. If you would invest 17,800 in WILLIS LEASE FIN on September 22, 2024 and sell it today you would earn a total of 1,200 from holding WILLIS LEASE FIN or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. BLUESCOPE STEEL
Performance |
| Timeline |
| WILLIS LEASE FIN |
| BLUESCOPE STEEL |
WILLIS LEASE and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and BLUESCOPE STEEL
The main advantage of trading using opposite WILLIS LEASE and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, BLUESCOPE STEEL 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 BLUESCOPE STEEL will offset losses from the drop in BLUESCOPE STEEL's long position.| WILLIS LEASE vs. Ashtead Group plc | WILLIS LEASE vs. WillScot Mobile Mini | WILLIS LEASE vs. Avis Budget Group | WILLIS LEASE vs. ALD SA |
| BLUESCOPE STEEL vs. Sixt Leasing SE | BLUESCOPE STEEL vs. Xinhua Winshare Publishing | BLUESCOPE STEEL vs. EMBARK EDUCATION LTD | BLUESCOPE STEEL vs. WILLIS LEASE FIN |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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