Correlation Between Will Semiconductor and Eastern Air

Can any of the company-specific risk be diversified away by investing in both Will Semiconductor and Eastern Air 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 Will Semiconductor and Eastern Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Will Semiconductor Co and Eastern Air Logistics, you can compare the effects of market volatilities on Will Semiconductor and Eastern Air 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 Will Semiconductor with a short position of Eastern Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Will Semiconductor and Eastern Air.

Diversification Opportunities for Will Semiconductor and Eastern Air

0.83

Correlation Coefficient

Will Semiconductor  Eastern Air

Very poor diversification

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

Pair Corralation between Will Semiconductor and Eastern Air

Assuming the 90 days trading horizon Will Semiconductor Co is expected to generate 1.24 times more return on investment than Eastern Air. However, Will Semiconductor is 1.24 times more volatile than Eastern Air Logistics. It trades about 0.11 of its potential returns per unit of risk. Eastern Air Logistics is currently generating about 0.05 per unit of risk. If you would invest  8,437  in Will Semiconductor Co on September 13, 2024 and sell it today you would earn a total of  1,558  from holding Will Semiconductor Co or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Will Semiconductor Co  vs.  Eastern Air Logistics

Will Semiconductor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Will Semiconductor Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Will Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Eastern Air Logistics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Air Logistics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastern Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Will Semiconductor and Eastern Air

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

The idea behind Will Semiconductor Co and Eastern Air Logistics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.