Correlation Between Flexsteel Industries and Willis Lease

Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Willis Lease 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 Flexsteel Industries and Willis Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flexsteel Industries and Willis Lease Finance, you can compare the effects of market volatilities on Flexsteel Industries and Willis Lease 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 Flexsteel Industries with a short position of Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Willis Lease.

Diversification Opportunities for Flexsteel Industries and Willis Lease

-0.26

Correlation Coefficient

Flexsteel Industries  Willis Lease

Very good diversification

The 3 months correlation between Flexsteel and Willis is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Willis Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Lease Finance has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Willis Lease go up and down completely randomly.

Pair Corralation between Flexsteel Industries and Willis Lease

Given the investment horizon of 90 days Flexsteel Industries is expected to generate 25.61 times less return on investment than Willis Lease. In addition to that, Flexsteel Industries is 1.2 times more volatile than Willis Lease Finance. It trades about 0.02 of its total potential returns per unit of risk. Willis Lease Finance is currently generating about 0.48 per unit of volatility. If you would invest  4,808  in Willis Lease Finance on March 2, 2024 and sell it today you would earn a total of  1,705  from holding Willis Lease Finance or generate 35.46% return on investment over 90 days.

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

Flexsteel Industries  vs.  Willis Lease Finance

Flexsteel Industries

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flexsteel Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Flexsteel Industries is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Willis Lease Finance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flexsteel Industries and Willis Lease

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

The idea behind Flexsteel Industries and Willis Lease Finance 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.