Correlation Between WILLIS LEASE and Sinopec Oilfield
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Sinopec Oilfield 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 Sinopec Oilfield 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 Sinopec Oilfield Service, you can compare the effects of market volatilities on WILLIS LEASE and Sinopec Oilfield 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 Sinopec Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Sinopec Oilfield.
Diversification Opportunities for WILLIS LEASE and Sinopec Oilfield
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WILLIS and Sinopec is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service 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 Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Sinopec Oilfield go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Sinopec Oilfield
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 0.41 times more return on investment than Sinopec Oilfield. However, WILLIS LEASE FIN is 2.43 times less risky than Sinopec Oilfield. It trades about 0.18 of its potential returns per unit of risk. Sinopec Oilfield Service is currently generating about 0.05 per unit of risk. If you would invest 4,173 in WILLIS LEASE FIN on September 14, 2024 and sell it today you would earn a total of 15,027 from holding WILLIS LEASE FIN or generate 360.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Sinopec Oilfield Service
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Sinopec Oilfield Service |
WILLIS LEASE and Sinopec Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Sinopec Oilfield
The main advantage of trading using opposite WILLIS LEASE and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's long position.| WILLIS LEASE vs. United Rentals | WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. SIVERS SEMICONDUCTORS AB | WILLIS LEASE vs. Norsk Hydro ASA |
| Sinopec Oilfield vs. COLUMBIA SPORTSWEAR | Sinopec Oilfield vs. Lendlease Group | Sinopec Oilfield vs. WILLIS LEASE FIN | Sinopec Oilfield vs. LG Display Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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