Correlation Between Walker Dunlop and Amazon

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

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

Diversification Opportunities for Walker Dunlop and Amazon

-0.39

Correlation Coefficient

Walker Dunlop  Amazon

Very good diversification

The 3 months correlation between Walker and Amazon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Amazon go up and down completely randomly.

Pair Corralation between Walker Dunlop and Amazon

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Amazon. In addition to that, Walker Dunlop is 1.38 times more volatile than Amazon Inc. It trades about -0.2 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.04 per unit of volatility. If you would invest  423,229  in Amazon Inc on November 28, 2024 and sell it today you would earn a total of  12,653  from holding Amazon Inc or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Walker Dunlop  vs.  Amazon Inc

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Amazon Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amazon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and Amazon

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

The idea behind Walker Dunlop and Amazon Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.