Correlation Between Willis Lease and Vestis

Can any of the company-specific risk be diversified away by investing in both Willis Lease and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on Willis Lease and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Vestis.

Diversification Opportunities for Willis Lease and Vestis

-0.83

Correlation Coefficient

Willis Lease  Vestis

Pay attention - limited upside

The 3 months correlation between Willis and Vestis is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Willis Lease i.e., Willis Lease and Vestis go up and down completely randomly.

Pair Corralation between Willis Lease and Vestis

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 0.48 times more return on investment than Vestis. However, Willis Lease Finance is 2.08 times less risky than Vestis. It trades about 0.03 of its potential returns per unit of risk. Vestis is currently generating about -0.03 per unit of risk. If you would invest  5,632  in Willis Lease Finance on February 16, 2024 and sell it today you would earn a total of  804.00  from holding Willis Lease Finance or generate 14.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	55.52%
Values	Daily Returns

Willis Lease Finance  vs.  Vestis

Willis Lease Finance

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vestis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Willis Lease and Vestis

The main advantage of trading using opposite Willis Lease and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.

The idea behind Willis Lease Finance and Vestis pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.