Correlation Between WILLIS LEASE and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Lenovo Group 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 Lenovo Group 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 Lenovo Group Limited, you can compare the effects of market volatilities on WILLIS LEASE and Lenovo Group 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 Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Lenovo Group.
Diversification Opportunities for WILLIS LEASE and Lenovo Group
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WILLIS and Lenovo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited 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 Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Lenovo Group go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Lenovo Group
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.77 times more return on investment than Lenovo Group. However, WILLIS LEASE is 1.77 times more volatile than Lenovo Group Limited. It trades about 0.13 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.0 per unit of risk. If you would invest 17,180 in WILLIS LEASE FIN on September 3, 2024 and sell it today you would earn a total of 2,420 from holding WILLIS LEASE FIN or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Lenovo Group Limited
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Lenovo Group Limited |
WILLIS LEASE and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Lenovo Group
The main advantage of trading using opposite WILLIS LEASE and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Lenovo Group 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 Lenovo Group will offset losses from the drop in Lenovo Group'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 |
| Lenovo Group vs. UNITED RENTALS | Lenovo Group vs. LION ONE METALS | Lenovo Group vs. PARKEN Sport Entertainment | Lenovo Group 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 CEOs Directory module to screen CEOs from public companies around the world.
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