Correlation Between Walker Dunlop and BW OFFSHORE

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

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

Diversification Opportunities for Walker Dunlop and BW OFFSHORE

-0.52

Correlation Coefficient

Walker Dunlop  BW OFFSHORE

Excellent diversification

The 3 months correlation between Walker and XY81 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and BW OFFSHORE go up and down completely randomly.

Pair Corralation between Walker Dunlop and BW OFFSHORE

Assuming the 90 days horizon Walker Dunlop is expected to under-perform the BW OFFSHORE. In addition to that, Walker Dunlop is 1.05 times more volatile than BW OFFSHORE LTD. It trades about -0.07 of its total potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.17 per unit of volatility. If you would invest  235.00  in BW OFFSHORE LTD on October 26, 2024 and sell it today you would earn a total of  16.00  from holding BW OFFSHORE LTD or generate 6.81% return on investment over 90 days.

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

Walker Dunlop  vs.  BW OFFSHORE LTD

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 uncertain 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.

BW OFFSHORE LTD

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Walker Dunlop and BW OFFSHORE

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

The idea behind Walker Dunlop and BW OFFSHORE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .