Correlation Between WILLIS LEASE and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Penta Ocean 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 Penta Ocean 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 Penta Ocean Construction Co, you can compare the effects of market volatilities on WILLIS LEASE and Penta Ocean 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 Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Penta Ocean.
Diversification Opportunities for WILLIS LEASE and Penta Ocean
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WILLIS and Penta is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc 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 Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Penta Ocean go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Penta Ocean
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 4.04 times more return on investment than Penta Ocean. However, WILLIS LEASE is 4.04 times more volatile than Penta Ocean Construction Co. It trades about 0.16 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.02 per unit of risk. If you would invest 16,480 in WILLIS LEASE FIN on September 1, 2024 and sell it today you would earn a total of 3,120 from holding WILLIS LEASE FIN or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Penta Ocean Construction Co
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Penta Ocean Construc |
WILLIS LEASE and Penta Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Penta Ocean
The main advantage of trading using opposite WILLIS LEASE and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.| WILLIS LEASE vs. United Rentals | WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. NMI Holdings | WILLIS LEASE vs. Origin Agritech |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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