Correlation Between Walker Dunlop and Country Garden

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

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

Diversification Opportunities for Walker Dunlop and Country Garden

0.35

Correlation Coefficient

Walker Dunlop  Country Garden

Weak diversification

The 3 months correlation between Walker and Country is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings 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 Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Country Garden go up and down completely randomly.

Pair Corralation between Walker Dunlop and Country Garden

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 10.49 times less return on investment than Country Garden. But when comparing it to its historical volatility, Walker Dunlop is 6.35 times less risky than Country Garden. It trades about 0.04 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Country Garden Holdings on September 4, 2024 and sell it today you would earn a total of  145.00  from holding Country Garden Holdings or generate 63.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.55%
Values	Daily Returns

Walker Dunlop  vs.  Country Garden Holdings

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Country Garden Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Country Garden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Country Garden showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Country Garden

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

The idea behind Walker Dunlop and Country Garden Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .