Correlation Between Walker Dunlop and ACNB

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

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

Diversification Opportunities for Walker Dunlop and ACNB

0.8

Correlation Coefficient

Walker Dunlop  ACNB

Very poor diversification

The 3 months correlation between Walker and ACNB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and ACNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACNB 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 ACNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACNB has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and ACNB go up and down completely randomly.

Pair Corralation between Walker Dunlop and ACNB

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the ACNB. In addition to that, Walker Dunlop is 1.1 times more volatile than ACNB Corporation. It trades about -0.19 of its total potential returns per unit of risk. ACNB Corporation is currently generating about -0.1 per unit of volatility. If you would invest  4,612  in ACNB Corporation on December 2, 2024 and sell it today you would lose (515.00) from holding ACNB Corporation or give up 11.17% of portfolio value over 90 days.

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

Walker Dunlop  vs.  ACNB Corp.

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

ACNB

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACNB Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walker Dunlop and ACNB

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

The idea behind Walker Dunlop and ACNB Corporation 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.