Correlation Between Willis Lease and Hooker Furniture

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

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

Diversification Opportunities for Willis Lease and Hooker Furniture

-0.65

Correlation Coefficient

Willis Lease  Hooker Furniture

Excellent diversification

The 3 months correlation between Willis and Hooker is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Finance are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Willis Lease i.e., Willis Lease and Hooker Furniture go up and down completely randomly.

Pair Corralation between Willis Lease and Hooker Furniture

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 0.67 times more return on investment than Hooker Furniture. However, Willis Lease Finance is 1.48 times less risky than Hooker Furniture. It trades about 0.0 of its potential returns per unit of risk. Hooker Furniture is currently generating about -0.35 per unit of risk. If you would invest  6,306  in Willis Lease Finance on March 15, 2024 and sell it today you would lose (22.00) from holding Willis Lease Finance or give up 0.35% of portfolio value over 90 days.

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

Willis Lease Finance  vs.  Hooker Furniture

Willis Lease Finance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Willis Lease and Hooker Furniture

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

The idea behind Willis Lease Finance and Hooker Furniture 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.