Correlation Between Walker Dunlop and AGNC Investment

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

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

Diversification Opportunities for Walker Dunlop and AGNC Investment

0.31

Correlation Coefficient

Walker Dunlop  AGNC Investment

Weak diversification

The 3 months correlation between Walker and AGNC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and AGNC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC Investment Corp 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 AGNC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGNC Investment Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and AGNC Investment go up and down completely randomly.

Pair Corralation between Walker Dunlop and AGNC Investment

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the AGNC Investment. In addition to that, Walker Dunlop is 2.76 times more volatile than AGNC Investment Corp. It trades about -0.09 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about -0.05 per unit of volatility. If you would invest  2,524  in AGNC Investment Corp on September 12, 2024 and sell it today you would lose (13.99) from holding AGNC Investment Corp or give up 0.55% of portfolio value over 90 days.

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

Walker Dunlop  vs.  AGNC Investment Corp

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AGNC Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Walker Dunlop and AGNC Investment

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

The idea behind Walker Dunlop and AGNC Investment Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.