Correlation Between Walker Dunlop and Jiangsu Cai

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Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Jiangsu Cai 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 Jiangsu Cai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Jiangsu Cai Qin, you can compare the effects of market volatilities on Walker Dunlop and Jiangsu Cai 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 Jiangsu Cai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Jiangsu Cai.

Diversification Opportunities for Walker Dunlop and Jiangsu Cai

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Walker and Jiangsu is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Jiangsu Cai Qin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Cai Qin 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 Jiangsu Cai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Cai Qin has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Jiangsu Cai go up and down completely randomly.

Pair Corralation between Walker Dunlop and Jiangsu Cai

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.43 times less return on investment than Jiangsu Cai. But when comparing it to its historical volatility, Walker Dunlop is 1.9 times less risky than Jiangsu Cai. It trades about 0.03 of its potential returns per unit of risk. Jiangsu Cai Qin is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,828  in Jiangsu Cai Qin on October 23, 2024 and sell it today you would lose (43.00) from holding Jiangsu Cai Qin or give up 2.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.05%
ValuesDaily Returns

Walker Dunlop  vs.  Jiangsu Cai Qin

 Performance 
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Jiangsu Cai Qin 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jiangsu Cai Qin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangsu Cai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walker Dunlop and Jiangsu Cai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and Jiangsu Cai

The main advantage of trading using opposite Walker Dunlop and Jiangsu Cai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Jiangsu Cai 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 Jiangsu Cai will offset losses from the drop in Jiangsu Cai's long position.
The idea behind Walker Dunlop and Jiangsu Cai Qin 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 Valuation module to check real value of public entities based on technical and fundamental data.

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