Correlation Between WILLIS LEASE and Stanley Black
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Stanley Black 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 Stanley Black 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 Stanley Black Decker, you can compare the effects of market volatilities on WILLIS LEASE and Stanley Black 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 Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Stanley Black.
Diversification Opportunities for WILLIS LEASE and Stanley Black
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WILLIS and Stanley is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker 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 Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Stanley Black go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Stanley Black
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.07 times more return on investment than Stanley Black. However, WILLIS LEASE is 1.07 times more volatile than Stanley Black Decker. It trades about -0.25 of its potential returns per unit of risk. Stanley Black Decker is currently generating about -0.39 per unit of risk. If you would invest 15,100 in WILLIS LEASE FIN on January 12, 2025 and sell it today you would lose (3,200) from holding WILLIS LEASE FIN or give up 21.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Stanley Black Decker
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Stanley Black Decker |
WILLIS LEASE and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Stanley Black
The main advantage of trading using opposite WILLIS LEASE and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Stanley Black 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 Stanley Black will offset losses from the drop in Stanley Black's long position.| WILLIS LEASE vs. AUST AGRICULTURAL | WILLIS LEASE vs. Costco Wholesale Corp | WILLIS LEASE vs. Titan Machinery | WILLIS LEASE vs. BURLINGTON STORES |
| Stanley Black vs. Techtronic Industries | Stanley Black vs. Snap on Incorporated | Stanley Black vs. Toro Co | Stanley Black vs. Lincoln Electric Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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