Correlation Between Walker Dunlop and Carillon Chartwell

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

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

Diversification Opportunities for Walker Dunlop and Carillon Chartwell

0.6

Correlation Coefficient

Walker Dunlop  Carillon Chartwell

Poor diversification

The 3 months correlation between Walker and Carillon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Carillon Chartwell Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Chartwell Small 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 Carillon Chartwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Chartwell Small has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Carillon Chartwell go up and down completely randomly.

Pair Corralation between Walker Dunlop and Carillon Chartwell

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Carillon Chartwell. In addition to that, Walker Dunlop is 1.84 times more volatile than Carillon Chartwell Small. It trades about -0.08 of its total potential returns per unit of risk. Carillon Chartwell Small is currently generating about -0.12 per unit of volatility. If you would invest  1,506  in Carillon Chartwell Small on December 29, 2024 and sell it today you would lose (118.00) from holding Carillon Chartwell Small or give up 7.84% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Carillon Chartwell Small

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.

Carillon Chartwell Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carillon Chartwell Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Walker Dunlop and Carillon Chartwell

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

The idea behind Walker Dunlop and Carillon Chartwell Small 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.