Correlation Between Willis Lease and Natuzzi SpA
Can any of the company-specific risk be diversified away by investing in both Willis Lease and Natuzzi SpA 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 Natuzzi SpA 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 Natuzzi SpA, you can compare the effects of market volatilities on Willis Lease and Natuzzi SpA 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 Natuzzi SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Natuzzi SpA.
Diversification Opportunities for Willis Lease and Natuzzi SpA
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Willis and Natuzzi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Natuzzi SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natuzzi SpA 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 Natuzzi SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natuzzi SpA has no effect on the direction of Willis Lease i.e., Willis Lease and Natuzzi SpA go up and down completely randomly.
Pair Corralation between Willis Lease and Natuzzi SpA
Given the investment horizon of 90 days Willis Lease Finance is expected to generate 0.89 times more return on investment than Natuzzi SpA. However, Willis Lease Finance is 1.13 times less risky than Natuzzi SpA. It trades about 0.3 of its potential returns per unit of risk. Natuzzi SpA is currently generating about 0.08 per unit of risk. If you would invest 10,218 in Willis Lease Finance on August 31, 2024 and sell it today you would earn a total of 10,996 from holding Willis Lease Finance or generate 107.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 88.89% |
Values | Daily Returns |
Willis Lease Finance vs. Natuzzi SpA
Performance |
Timeline |
Willis Lease Finance |
Natuzzi SpA |
Willis Lease and Natuzzi SpA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Willis Lease and Natuzzi SpA
The main advantage of trading using opposite Willis Lease and Natuzzi SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Natuzzi SpA 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 Natuzzi SpA will offset losses from the drop in Natuzzi SpA's 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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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