Correlation Between CNFinance Holdings and Walker Dunlop

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

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

Diversification Opportunities for CNFinance Holdings and Walker Dunlop

0.21

Correlation Coefficient

CNFinance Holdings  Walker Dunlop

Modest diversification

The 3 months correlation between CNFinance and Walker is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Walker Dunlop go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Walker Dunlop

Considering the 90-day investment horizon CNFinance Holdings is expected to generate 2.81 times more return on investment than Walker Dunlop. However, CNFinance Holdings is 2.81 times more volatile than Walker Dunlop. It trades about -0.01 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.08 per unit of risk. If you would invest  95.00  in CNFinance Holdings on December 29, 2024 and sell it today you would lose (12.00) from holding CNFinance Holdings or give up 12.63% of portfolio value over 90 days.

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

CNFinance Holdings  vs.  Walker Dunlop

CNFinance Holdings

Risk-Adjusted Performance

Very Weak

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

Walker Dunlop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CNFinance Holdings and Walker Dunlop

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

The idea behind CNFinance Holdings and Walker Dunlop 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.