Correlation Between Walker Dunlop and UBS 100

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and UBS 100 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 UBS 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and UBS 100 Index Fund, you can compare the effects of market volatilities on Walker Dunlop and UBS 100 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 UBS 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and UBS 100.

Diversification Opportunities for Walker Dunlop and UBS 100

0.63

Correlation Coefficient

Walker Dunlop  UBS 100

Poor diversification

The 3 months correlation between Walker and UBS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and UBS 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 100 Index 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 UBS 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS 100 Index has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and UBS 100 go up and down completely randomly.

Pair Corralation between Walker Dunlop and UBS 100

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the UBS 100. In addition to that, Walker Dunlop is 2.87 times more volatile than UBS 100 Index Fund. It trades about -0.32 of its total potential returns per unit of risk. UBS 100 Index Fund is currently generating about -0.14 per unit of volatility. If you would invest  14,602  in UBS 100 Index Fund on October 7, 2024 and sell it today you would lose (214.00) from holding UBS 100 Index Fund or give up 1.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.0%
Values	Daily Returns

Walker Dunlop  vs.  UBS 100 Index Fund

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 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.

UBS 100 Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS 100 Index Fund has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, UBS 100 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and UBS 100

The main advantage of trading using opposite Walker Dunlop and UBS 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, UBS 100 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 UBS 100 will offset losses from the drop in UBS 100's long position.

The idea behind Walker Dunlop and UBS 100 Index Fund 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.