Correlation Between Willis Lease and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both Willis Lease and AerCap Holdings 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 AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willis Lease Finance and AerCap Holdings NV, you can compare the effects of market volatilities on Willis Lease and AerCap Holdings 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 AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and AerCap Holdings.
Diversification Opportunities for Willis Lease and AerCap Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Willis and AerCap is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV 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 Finance are associated (or correlated) with AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of Willis Lease i.e., Willis Lease and AerCap Holdings go up and down completely randomly.
Pair Corralation between Willis Lease and AerCap Holdings
Given the investment horizon of 90 days Willis Lease Finance is expected to generate 4.52 times more return on investment than AerCap Holdings. However, Willis Lease is 4.52 times more volatile than AerCap Holdings NV. It trades about 0.07 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.07 per unit of risk. If you would invest 18,898 in Willis Lease Finance on August 23, 2024 and sell it today you would earn a total of 1,016 from holding Willis Lease Finance or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Lease Finance vs. AerCap Holdings NV
Performance |
| Timeline |
| Willis Lease Finance |
| AerCap Holdings NV |
Willis Lease and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Lease and AerCap Holdings
The main advantage of trading using opposite Willis Lease and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.| Willis Lease vs. Custom Truck One | Willis Lease vs. GATX Corporation | Willis Lease vs. HE Equipment Services | Willis Lease vs. Alta Equipment Group |
| AerCap Holdings vs. HE Equipment Services | AerCap Holdings vs. Air Lease | AerCap Holdings vs. Aquagold International | AerCap Holdings vs. Small Cap Core |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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