Correlation Between Walker Dunlop and DAC

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

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

Diversification Opportunities for Walker Dunlop and DAC

0.0

Correlation Coefficient

Walker Dunlop  DAC

Pay attention - limited upside

The 3 months correlation between Walker and DAC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and DAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAC 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 DAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAC has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and DAC go up and down completely randomly.

Pair Corralation between Walker Dunlop and DAC

If you would invest (100.00) in DAC on December 28, 2024 and sell it today you would earn a total of  100.00  from holding DAC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walker Dunlop  vs.  DAC

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.

DAC

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Walker Dunlop and DAC 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.