Correlation Between Walker Dunlop and KBSTAR EURO

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

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

Diversification Opportunities for Walker Dunlop and KBSTAR EURO

-0.77

Correlation Coefficient

Walker Dunlop  KBSTAR EURO

Pay attention - limited upside

The 3 months correlation between Walker and KBSTAR is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and KBSTAR EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBSTAR EURO STOXX 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 KBSTAR EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBSTAR EURO STOXX has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and KBSTAR EURO go up and down completely randomly.

Pair Corralation between Walker Dunlop and KBSTAR EURO

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the KBSTAR EURO. In addition to that, Walker Dunlop is 1.86 times more volatile than KBSTAR EURO STOXX. It trades about -0.08 of its total potential returns per unit of risk. KBSTAR EURO STOXX is currently generating about 0.17 per unit of volatility. If you would invest  1,351,500  in KBSTAR EURO STOXX on December 29, 2024 and sell it today you would earn a total of  142,000  from holding KBSTAR EURO STOXX or generate 10.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Walker Dunlop  vs.  KBSTAR EURO STOXX

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.

KBSTAR EURO STOXX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBSTAR EURO STOXX are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KBSTAR EURO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walker Dunlop and KBSTAR EURO

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

The idea behind Walker Dunlop and KBSTAR EURO STOXX 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.