Correlation Between TRAVEL + and WILLIS LEASE

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and WILLIS LEASE FIN, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and WILLIS LEASE.

Diversification Opportunities for TRAVEL + and WILLIS LEASE

-0.32

Correlation Coefficient

TRAVEL +  WILLIS LEASE

Very good diversification

The 3 months correlation between TRAVEL and WILLIS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 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 TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and WILLIS LEASE go up and down completely randomly.

Pair Corralation between TRAVEL + and WILLIS LEASE

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.57 times more return on investment than WILLIS LEASE. However, TRAVEL LEISURE DL 01 is 1.76 times less risky than WILLIS LEASE. It trades about 0.26 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about 0.0 per unit of risk. If you would invest  3,737  in TRAVEL LEISURE DL 01 on April 24, 2025 and sell it today you would earn a total of  1,163  from holding TRAVEL LEISURE DL 01 or generate 31.12% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  WILLIS LEASE FIN

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRAVEL + and WILLIS LEASE

The main advantage of trading using opposite TRAVEL + and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.