Correlation Between WILLIS LEASE and AUCKLAND INTL
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and AUCKLAND INTL 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 AUCKLAND INTL 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 AUCKLAND INTL AIRPORT, you can compare the effects of market volatilities on WILLIS LEASE and AUCKLAND INTL 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 AUCKLAND INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and AUCKLAND INTL.
Diversification Opportunities for WILLIS LEASE and AUCKLAND INTL
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WILLIS and AUCKLAND is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and AUCKLAND INTL AIRPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUCKLAND INTL AIRPORT 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 AUCKLAND INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUCKLAND INTL AIRPORT has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and AUCKLAND INTL go up and down completely randomly.
Pair Corralation between WILLIS LEASE and AUCKLAND INTL
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 2.64 times more return on investment than AUCKLAND INTL. However, WILLIS LEASE is 2.64 times more volatile than AUCKLAND INTL AIRPORT. It trades about 0.19 of its potential returns per unit of risk. AUCKLAND INTL AIRPORT is currently generating about -0.01 per unit of risk. If you would invest 4,252 in WILLIS LEASE FIN on September 14, 2024 and sell it today you would earn a total of 14,948 from holding WILLIS LEASE FIN or generate 351.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. AUCKLAND INTL AIRPORT
Performance |
| Timeline |
| WILLIS LEASE FIN |
| AUCKLAND INTL AIRPORT |
WILLIS LEASE and AUCKLAND INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and AUCKLAND INTL
The main advantage of trading using opposite WILLIS LEASE and AUCKLAND INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, AUCKLAND INTL 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 AUCKLAND INTL will offset losses from the drop in AUCKLAND INTL's long position.| WILLIS LEASE vs. United Rentals | WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. SIVERS SEMICONDUCTORS AB | WILLIS LEASE vs. Norsk Hydro ASA |
| AUCKLAND INTL vs. BlueScope Steel Limited | AUCKLAND INTL vs. United States Steel | AUCKLAND INTL vs. Nippon Steel | AUCKLAND INTL vs. Boiron SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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