Correlation Between Willis Lease and Air Lease
Can any of the company-specific risk be diversified away by investing in both Willis Lease and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on Willis Lease and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Air Lease.
Diversification Opportunities for Willis Lease and Air Lease
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Willis and Air is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Willis Lease i.e., Willis Lease and Air Lease go up and down completely randomly.
Pair Corralation between Willis Lease and Air Lease
Given the investment horizon of 90 days Willis Lease Finance is expected to generate 3.43 times more return on investment than Air Lease. However, Willis Lease is 3.43 times more volatile than Air Lease. It trades about 0.12 of its potential returns per unit of risk. Air Lease is currently generating about 0.34 per unit of risk. If you would invest 18,468 in Willis Lease Finance on August 26, 2024 and sell it today you would earn a total of 2,258 from holding Willis Lease Finance or generate 12.23% 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. Air Lease
Performance |
| Timeline |
| Willis Lease Finance |
| Air Lease |
Willis Lease and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Lease and Air Lease
The main advantage of trading using opposite Willis Lease and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Willis Lease vs. PROG Holdings | Willis Lease vs. McGrath RentCorp | Willis Lease vs. Mega Matrix Corp | Willis Lease vs. FTAI Aviation Ltd |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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