Correlation Between Ocwen Financial and Walker Dunlop

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

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

Diversification Opportunities for Ocwen Financial and Walker Dunlop

-0.72

Correlation Coefficient

Ocwen Financial  Walker Dunlop

Pay attention - limited upside

The 3 months correlation between Ocwen and Walker is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ocwen Financial and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Ocwen Financial 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 Ocwen Financial 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 Ocwen Financial i.e., Ocwen Financial and Walker Dunlop go up and down completely randomly.

Pair Corralation between Ocwen Financial and Walker Dunlop

If you would invest  9,484  in Walker Dunlop on September 22, 2024 and sell it today you would earn a total of  291.00  from holding Walker Dunlop or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.79%
Values	Daily Returns

Ocwen Financial  vs.  Walker Dunlop

Ocwen Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocwen Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ocwen Financial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ocwen Financial and Walker Dunlop

The main advantage of trading using opposite Ocwen Financial and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocwen Financial 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 Ocwen Financial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.