Correlation Between WILLIS LEASE and Perma-Fix Environmental

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

Diversification Opportunities for WILLIS LEASE and Perma-Fix Environmental

0.94

Correlation Coefficient

WILLIS LEASE  Perma-Fix Environmental

Almost no diversification

The 3 months correlation between WILLIS and Perma-Fix is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Perma-Fix Environmental

Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 1.28 times more return on investment than Perma-Fix Environmental. However, WILLIS LEASE is 1.28 times more volatile than Perma Fix Environmental Services. It trades about 0.28 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.21 per unit of risk. If you would invest  9,189  in WILLIS LEASE FIN on September 4, 2024 and sell it today you would earn a total of  10,411  from holding WILLIS LEASE FIN or generate 113.3% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  Perma Fix Environmental Servic

WILLIS LEASE FIN

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WILLIS LEASE reported solid returns over the last few months and may actually be approaching a breakup point.

Perma Fix Environmental

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Fix Environmental Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perma-Fix Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and Perma-Fix Environmental

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

The idea behind WILLIS LEASE FIN and Perma Fix Environmental Services 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.