Correlation Between Walker Dunlop and Afine Investments

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

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

Diversification Opportunities for Walker Dunlop and Afine Investments

0.66

Correlation Coefficient

Walker Dunlop  Afine Investments

Poor diversification

The 3 months correlation between Walker and Afine is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments 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 Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Afine Investments go up and down completely randomly.

Pair Corralation between Walker Dunlop and Afine Investments

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Afine Investments. In addition to that, Walker Dunlop is 1.7 times more volatile than Afine Investments. It trades about -0.08 of its total potential returns per unit of risk. Afine Investments is currently generating about -0.05 per unit of volatility. If you would invest  40,200  in Afine Investments on December 28, 2024 and sell it today you would lose (1,600) from holding Afine Investments or give up 3.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Walker Dunlop  vs.  Afine Investments

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.

Afine Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afine Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Afine Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walker Dunlop and Afine Investments

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

The idea behind Walker Dunlop and Afine Investments 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 Anywhere module to track or share privately all of your investments from the convenience of any device.