Correlation Between Walker Dunlop and DTCOM Direct

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

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

Diversification Opportunities for Walker Dunlop and DTCOM Direct

0.63

Correlation Coefficient

Walker Dunlop  DTCOM Direct

Poor diversification

The 3 months correlation between Walker and DTCOM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and DTCOM Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTCOM Direct 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 DTCOM Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTCOM Direct has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and DTCOM Direct go up and down completely randomly.

Pair Corralation between Walker Dunlop and DTCOM Direct

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the DTCOM Direct. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.32 times less risky than DTCOM Direct. The stock trades about -0.09 of its potential returns per unit of risk. The DTCOM Direct is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  445.00  in DTCOM Direct on December 21, 2024 and sell it today you would lose (25.00) from holding DTCOM Direct or give up 5.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Walker Dunlop  vs.  DTCOM Direct

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.

DTCOM Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days DTCOM Direct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DTCOM Direct is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walker Dunlop and DTCOM Direct

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

The idea behind Walker Dunlop and DTCOM Direct 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.