Correlation Between WILLIS LEASE and Grand Canyon

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

Diversification Opportunities for WILLIS LEASE and Grand Canyon

0.71

Correlation Coefficient

WILLIS LEASE  Grand Canyon

Poor diversification

The 3 months correlation between WILLIS and Grand is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Grand Canyon go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Grand Canyon

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.74 times more return on investment than Grand Canyon. However, WILLIS LEASE is 1.74 times more volatile than Grand Canyon Education. It trades about 0.1 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.06 per unit of risk. If you would invest  5,437  in WILLIS LEASE FIN on September 24, 2024 and sell it today you would earn a total of  13,263  from holding WILLIS LEASE FIN or generate 243.94% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  Grand Canyon Education

WILLIS LEASE FIN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WILLIS LEASE reported solid returns over the last few months and may actually be approaching a breakup point.

Grand Canyon Education

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grand Canyon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and Grand Canyon

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

The idea behind WILLIS LEASE FIN and Grand Canyon Education 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.