Correlation Between WILLIS LEASE and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on WILLIS LEASE and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and JAPAN TOBACCO.
Diversification Opportunities for WILLIS LEASE and JAPAN TOBACCO
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WILLIS and JAPAN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between WILLIS LEASE and JAPAN TOBACCO
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.76 times more return on investment than JAPAN TOBACCO. However, WILLIS LEASE is 1.76 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.14 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.06 per unit of risk. If you would invest 4,565 in WILLIS LEASE FIN on August 31, 2024 and sell it today you would earn a total of 16,235 from holding WILLIS LEASE FIN or generate 355.64% 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. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| WILLIS LEASE FIN |
| JAPAN TOBACCO UNSPADR12 |
WILLIS LEASE and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and JAPAN TOBACCO
The main advantage of trading using opposite WILLIS LEASE and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| WILLIS LEASE vs. National Storage Affiliates | WILLIS LEASE vs. DATANG INTL POW | WILLIS LEASE vs. BE Semiconductor Industries | WILLIS LEASE vs. Hyrican Informationssysteme Aktiengesellschaft |
| JAPAN TOBACCO vs. Titan Machinery | JAPAN TOBACCO vs. Federal Agricultural Mortgage | JAPAN TOBACCO vs. HYDROFARM HLD GRP | JAPAN TOBACCO vs. Autohome ADR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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