Correlation Between Walker Dunlop and Citizens Northern

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

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

Diversification Opportunities for Walker Dunlop and Citizens Northern

0.12

Correlation Coefficient

Walker Dunlop  Citizens Northern

Average diversification

The 3 months correlation between Walker and Citizens is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Citizens Northern Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Northern 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 Citizens Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Northern Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Citizens Northern go up and down completely randomly.

Pair Corralation between Walker Dunlop and Citizens Northern

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.59 times less return on investment than Citizens Northern. But when comparing it to its historical volatility, Walker Dunlop is 1.45 times less risky than Citizens Northern. It trades about 0.08 of its potential returns per unit of risk. Citizens Northern Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,886  in Citizens Northern Corp on September 4, 2024 and sell it today you would earn a total of  165.00  from holding Citizens Northern Corp or generate 8.75% return on investment over 90 days.

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

Walker Dunlop  vs.  Citizens Northern Corp

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.

Citizens Northern Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Northern Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Citizens Northern may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walker Dunlop and Citizens Northern

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

The idea behind Walker Dunlop and Citizens Northern 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.