Correlation Between WILLIS LEASE and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on WILLIS LEASE and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and CDN IMPERIAL.
Diversification Opportunities for WILLIS LEASE and CDN IMPERIAL
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WILLIS and CDN is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between WILLIS LEASE and CDN IMPERIAL
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 2.34 times more return on investment than CDN IMPERIAL. However, WILLIS LEASE is 2.34 times more volatile than CDN IMPERIAL BANK. It trades about 0.1 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.1 per unit of risk. If you would invest 5,339 in WILLIS LEASE FIN on September 3, 2024 and sell it today you would earn a total of 14,261 from holding WILLIS LEASE FIN or generate 267.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| WILLIS LEASE FIN |
| CDN IMPERIAL BANK |
WILLIS LEASE and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and CDN IMPERIAL
The main advantage of trading using opposite WILLIS LEASE and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| WILLIS LEASE vs. Altair Engineering | WILLIS LEASE vs. WIZZ AIR HLDGUNSPADR4 | WILLIS LEASE vs. AIR PRODCHEMICALS | WILLIS LEASE vs. JAPAN TOBACCO UNSPADR12 |
| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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