Correlation Between Entravision Communications and WILLIS LEASE

Can any of the company-specific risk be diversified away by investing in both Entravision Communications 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 Entravision Communications and WILLIS LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entravision Communications and WILLIS LEASE FIN, you can compare the effects of market volatilities on Entravision Communications 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 Entravision Communications with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and WILLIS LEASE.

Diversification Opportunities for Entravision Communications and WILLIS LEASE

-0.21

Correlation Coefficient

Entravision Communications  WILLIS LEASE

Very good diversification

The 3 months correlation between Entravision and WILLIS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN and Entravision Communications 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 Entravision Communications 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 FIN has no effect on the direction of Entravision Communications i.e., Entravision Communications and WILLIS LEASE go up and down completely randomly.

Pair Corralation between Entravision Communications and WILLIS LEASE

Assuming the 90 days horizon Entravision Communications is expected to generate 1.12 times more return on investment than WILLIS LEASE. However, Entravision Communications is 1.12 times more volatile than WILLIS LEASE FIN. It trades about 0.14 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about 0.01 per unit of risk. If you would invest  159.00  in Entravision Communications on April 17, 2025 and sell it today you would earn a total of  49.00  from holding Entravision Communications or generate 30.82% return on investment over 90 days.

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

Entravision Communications  vs.  WILLIS LEASE FIN

Entravision Communications

Risk-Adjusted Performance

OK

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

WILLIS LEASE FIN

Risk-Adjusted Performance

Very Weak

Over the last 90 days WILLIS LEASE FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WILLIS LEASE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Entravision Communications and WILLIS LEASE

The main advantage of trading using opposite Entravision Communications and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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 Entravision Communications and WILLIS LEASE FIN 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.