Correlation Between Willis Lease and Arq
Can any of the company-specific risk be diversified away by investing in both Willis Lease and Arq 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 Arq 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 Arq Inc, you can compare the effects of market volatilities on Willis Lease and Arq 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 Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Arq.
Diversification Opportunities for Willis Lease and Arq
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Willis and Arq is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc 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 Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Willis Lease i.e., Willis Lease and Arq go up and down completely randomly.
Pair Corralation between Willis Lease and Arq
Given the investment horizon of 90 days Willis Lease Finance is expected to generate 0.81 times more return on investment than Arq. However, Willis Lease Finance is 1.24 times less risky than Arq. It trades about -0.16 of its potential returns per unit of risk. Arq Inc is currently generating about -0.34 per unit of risk. If you would invest 20,141 in Willis Lease Finance on December 8, 2024 and sell it today you would lose (1,836) from holding Willis Lease Finance or give up 9.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Lease Finance vs. Arq Inc
Performance |
| Timeline |
| Willis Lease Finance |
| Arq Inc |
Willis Lease and Arq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Lease and Arq
The main advantage of trading using opposite Willis Lease and Arq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Arq 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 Arq will offset losses from the drop in Arq's long position.| Willis Lease vs. Custom Truck One | ||
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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