Correlation Between Willis Lease and Flexsteel Industries
Can any of the company-specific risk be diversified away by investing in both Willis Lease and Flexsteel Industries 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 Flexsteel Industries 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 Flexsteel Industries, you can compare the effects of market volatilities on Willis Lease and Flexsteel Industries 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 Flexsteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Flexsteel Industries.
Diversification Opportunities for Willis Lease and Flexsteel Industries
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Willis and Flexsteel is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries 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 Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of Willis Lease i.e., Willis Lease and Flexsteel Industries go up and down completely randomly.
Pair Corralation between Willis Lease and Flexsteel Industries
Given the investment horizon of 90 days Willis Lease is expected to generate 1.15 times less return on investment than Flexsteel Industries. But when comparing it to its historical volatility, Willis Lease Finance is 1.26 times less risky than Flexsteel Industries. It trades about 0.11 of its potential returns per unit of risk. Flexsteel Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,399 in Flexsteel Industries on August 30, 2024 and sell it today you would earn a total of 4,518 from holding Flexsteel Industries or generate 322.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Lease Finance vs. Flexsteel Industries
Performance |
| Timeline |
| Willis Lease Finance |
| Flexsteel Industries |
Willis Lease and Flexsteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Lease and Flexsteel Industries
The main advantage of trading using opposite Willis Lease and Flexsteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Flexsteel Industries 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 Flexsteel Industries will offset losses from the drop in Flexsteel Industries' 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 |
| Flexsteel Industries vs. Hooker Furniture | Flexsteel Industries vs. Bassett Furniture Industries | Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |