Correlation Between Walker Dunlop and Brederode

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

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

Diversification Opportunities for Walker Dunlop and Brederode

0.21

Correlation Coefficient

Walker Dunlop  Brederode

Modest diversification

The 3 months correlation between Walker and Brederode is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA 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 Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Brederode go up and down completely randomly.

Pair Corralation between Walker Dunlop and Brederode

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.47 times more return on investment than Brederode. However, Walker Dunlop is 1.47 times more volatile than Brederode SA. It trades about 0.0 of its potential returns per unit of risk. Brederode SA is currently generating about -0.09 per unit of risk. If you would invest  10,790  in Walker Dunlop on September 13, 2024 and sell it today you would lose (48.00) from holding Walker Dunlop or give up 0.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Walker Dunlop  vs.  Brederode SA

Walker Dunlop

Risk-Adjusted Performance

0 of 100

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 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.

Brederode SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brederode SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brederode is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walker Dunlop and Brederode

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

The idea behind Walker Dunlop and Brederode SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.