Correlation Between Walker Dunlop and Basic Energy

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

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

Diversification Opportunities for Walker Dunlop and Basic Energy

-0.1

Correlation Coefficient

Walker Dunlop  Basic Energy

Good diversification

The 3 months correlation between Walker and Basic is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy 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 Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Basic Energy go up and down completely randomly.

Pair Corralation between Walker Dunlop and Basic Energy

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.68 times more return on investment than Basic Energy. However, Walker Dunlop is 1.48 times less risky than Basic Energy. It trades about 0.06 of its potential returns per unit of risk. Basic Energy Corp is currently generating about -0.03 per unit of risk. If you would invest  7,119  in Walker Dunlop on October 8, 2024 and sell it today you would earn a total of  2,480  from holding Walker Dunlop or generate 34.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Walker Dunlop  vs.  Basic Energy Corp

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Basic Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Basic Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Basic Energy 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 Basic Energy

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

The idea behind Walker Dunlop and Basic Energy 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.