Correlation Between WILLIS LEASE and DFS Furniture

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

Diversification Opportunities for WILLIS LEASE and DFS Furniture

-0.34

Correlation Coefficient

WILLIS LEASE  DFS Furniture

Very good diversification

The 3 months correlation between WILLIS and DFS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and DFS Furniture go up and down completely randomly.

Pair Corralation between WILLIS LEASE and DFS Furniture

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.41 times more return on investment than DFS Furniture. However, WILLIS LEASE is 1.41 times more volatile than DFS Furniture PLC. It trades about 0.0 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.09 per unit of risk. If you would invest  11,581  in WILLIS LEASE FIN on July 17, 2025 and sell it today you would lose (181.00) from holding WILLIS LEASE FIN or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

WILLIS LEASE FIN  vs.  DFS Furniture PLC

WILLIS LEASE FIN

Risk-Adjusted Performance

Weakest

Over the last 90 days WILLIS LEASE FIN has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

DFS Furniture PLC

Risk-Adjusted Performance

Weakest

Over the last 90 days DFS Furniture PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with WILLIS LEASE and DFS Furniture

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

The idea behind WILLIS LEASE FIN and DFS Furniture PLC 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.

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.