Correlation Between Walker Dunlop and SPARTAN STORES

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

By analyzing existing cross correlation between Walker Dunlop and SPARTAN STORES, you can compare the effects of market volatilities on Walker Dunlop and SPARTAN STORES 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 SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and SPARTAN STORES.

Diversification Opportunities for Walker Dunlop and SPARTAN STORES

-0.08

Correlation Coefficient

Walker Dunlop  SPARTAN STORES

Good diversification

The 3 months correlation between Walker and SPARTAN is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and SPARTAN STORES go up and down completely randomly.

Pair Corralation between Walker Dunlop and SPARTAN STORES

Assuming the 90 days horizon Walker Dunlop is expected to under-perform the SPARTAN STORES. In addition to that, Walker Dunlop is 1.35 times more volatile than SPARTAN STORES. It trades about -0.13 of its total potential returns per unit of risk. SPARTAN STORES is currently generating about 0.2 per unit of volatility. If you would invest  1,739  in SPARTAN STORES on September 23, 2024 and sell it today you would earn a total of  111.00  from holding SPARTAN STORES or generate 6.38% return on investment over 90 days.

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

Walker Dunlop  vs.  SPARTAN STORES

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 nearly stable basic indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walker Dunlop and SPARTAN STORES

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

The idea behind Walker Dunlop and SPARTAN STORES 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.