Correlation Between WILLIS LEASE and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Hochschild Mining 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 Hochschild Mining 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 Hochschild Mining plc, you can compare the effects of market volatilities on WILLIS LEASE and Hochschild Mining 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 Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Hochschild Mining.
Diversification Opportunities for WILLIS LEASE and Hochschild Mining
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WILLIS and Hochschild is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc 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 Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Hochschild Mining go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Hochschild Mining
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 0.75 times more return on investment than Hochschild Mining. However, WILLIS LEASE FIN is 1.33 times less risky than Hochschild Mining. It trades about -0.04 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about -0.13 per unit of risk. If you would invest 19,600 in WILLIS LEASE FIN on October 30, 2024 and sell it today you would lose (1,100) from holding WILLIS LEASE FIN or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Hochschild Mining plc
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Hochschild Mining plc |
WILLIS LEASE and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Hochschild Mining
The main advantage of trading using opposite WILLIS LEASE and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.| WILLIS LEASE vs. Easy Software AG | WILLIS LEASE vs. UNIQA INSURANCE GR | WILLIS LEASE vs. X FAB Silicon Foundries | WILLIS LEASE vs. Insurance Australia Group |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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