Correlation Between WILLIS LEASE and Global Ship

Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WILLIS LEASE FIN and Global Ship Lease, you can compare the effects of market volatilities on WILLIS LEASE and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Global Ship.

Diversification Opportunities for WILLIS LEASE and Global Ship

0.62

Correlation Coefficient

WILLIS LEASE  Global Ship

Poor diversification

The 3 months correlation between WILLIS and Global is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship 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 FIN are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Global Ship go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Global Ship

Assuming the 90 days horizon WILLIS LEASE is expected to generate 18.95 times less return on investment than Global Ship. In addition to that, WILLIS LEASE is 1.08 times more volatile than Global Ship Lease. It trades about 0.02 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.42 per unit of volatility. If you would invest  1,865  in Global Ship Lease on February 3, 2024 and sell it today you would earn a total of  295.00  from holding Global Ship Lease or generate 15.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

WILLIS LEASE FIN  vs.  Global Ship Lease

WILLIS LEASE FIN

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WILLIS LEASE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Ship Lease

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Ship reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and Global Ship

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

The idea behind WILLIS LEASE FIN and Global Ship Lease 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.