Correlation Between Walker Dunlop and PC Connection

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

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

Diversification Opportunities for Walker Dunlop and PC Connection

0.36

Correlation Coefficient

Walker Dunlop  PC Connection

Weak diversification

The 3 months correlation between Walker and CNXN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and PC Connection go up and down completely randomly.

Pair Corralation between Walker Dunlop and PC Connection

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the PC Connection. In addition to that, Walker Dunlop is 1.02 times more volatile than PC Connection. It trades about -0.21 of its total potential returns per unit of risk. PC Connection is currently generating about -0.1 per unit of volatility. If you would invest  7,288  in PC Connection on November 27, 2024 and sell it today you would lose (896.00) from holding PC Connection or give up 12.29% of portfolio value over 90 days.

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

Walker Dunlop  vs.  PC Connection

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.

PC Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days PC Connection has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Walker Dunlop and PC Connection

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

The idea behind Walker Dunlop and PC Connection 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.