Correlation Between Walker Dunlop and Heritage Fund

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

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

Diversification Opportunities for Walker Dunlop and Heritage Fund

0.45

Correlation Coefficient

Walker Dunlop  Heritage Fund

Very weak diversification

The 3 months correlation between Walker and Heritage is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Heritage Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Fund A 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 Heritage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Fund A has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Heritage Fund go up and down completely randomly.

Pair Corralation between Walker Dunlop and Heritage Fund

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Heritage Fund. In addition to that, Walker Dunlop is 1.24 times more volatile than Heritage Fund A. It trades about -0.09 of its total potential returns per unit of risk. Heritage Fund A is currently generating about -0.05 per unit of volatility. If you would invest  2,019  in Heritage Fund A on December 26, 2024 and sell it today you would lose (104.00) from holding Heritage Fund A or give up 5.15% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Heritage Fund A

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.

Heritage Fund A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heritage Fund A has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Heritage Fund 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 Heritage Fund

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

The idea behind Walker Dunlop and Heritage Fund A 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.