Correlation Between Walker Dunlop and CLOVER HEALTH

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and CLOVER HEALTH 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 Walker Dunlop and CLOVER HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and CLOVER HEALTH INV, you can compare the effects of market volatilities on Walker Dunlop and CLOVER HEALTH 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 Walker Dunlop with a short position of CLOVER HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and CLOVER HEALTH.

Diversification Opportunities for Walker Dunlop and CLOVER HEALTH

0.35

Correlation Coefficient

Walker Dunlop  CLOVER HEALTH

Weak diversification

The 3 months correlation between Walker and CLOVER is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with CLOVER HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOVER HEALTH INV has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and CLOVER HEALTH go up and down completely randomly.

Pair Corralation between Walker Dunlop and CLOVER HEALTH

Assuming the 90 days horizon Walker Dunlop is expected to generate 0.51 times more return on investment than CLOVER HEALTH. However, Walker Dunlop is 1.95 times less risky than CLOVER HEALTH. It trades about -0.07 of its potential returns per unit of risk. CLOVER HEALTH INV is currently generating about -0.16 per unit of risk. If you would invest  9,835  in Walker Dunlop on October 6, 2024 and sell it today you would lose (585.00) from holding Walker Dunlop or give up 5.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Walker Dunlop  vs.  CLOVER HEALTH INV

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CLOVER HEALTH INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLOVER HEALTH INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Walker Dunlop and CLOVER HEALTH

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

The idea behind Walker Dunlop and CLOVER HEALTH INV 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.