Correlation Between WILLIS LEASE and SHELF DRILLING

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

Diversification Opportunities for WILLIS LEASE and SHELF DRILLING

-0.4

Correlation Coefficient

WILLIS LEASE  SHELF DRILLING

Very good diversification

The 3 months correlation between WILLIS and SHELF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and SHELF DRILLING go up and down completely randomly.

Pair Corralation between WILLIS LEASE and SHELF DRILLING

Assuming the 90 days horizon WILLIS LEASE is expected to generate 6.05 times less return on investment than SHELF DRILLING. But when comparing it to its historical volatility, WILLIS LEASE FIN is 1.49 times less risky than SHELF DRILLING. It trades about 0.03 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  47.00  in SHELF DRILLING LTD on April 20, 2025 and sell it today you would earn a total of  19.00  from holding SHELF DRILLING LTD or generate 40.43% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  SHELF DRILLING LTD

WILLIS LEASE FIN

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIS LEASE FIN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WILLIS LEASE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SHELF DRILLING LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SHELF DRILLING LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SHELF DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and SHELF DRILLING

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

The idea behind WILLIS LEASE FIN and SHELF DRILLING LTD 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.