Correlation Between Walker Dunlop and Excelerate Energy

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

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

Diversification Opportunities for Walker Dunlop and Excelerate Energy

0.26

Correlation Coefficient

Walker Dunlop  Excelerate Energy

Modest diversification

The 3 months correlation between Walker and Excelerate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy 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 Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Excelerate Energy go up and down completely randomly.

Pair Corralation between Walker Dunlop and Excelerate Energy

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Excelerate Energy. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.16 times less risky than Excelerate Energy. The stock trades about -0.21 of its potential returns per unit of risk. The Excelerate Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,097  in Excelerate Energy on November 28, 2024 and sell it today you would lose (286.00) from holding Excelerate Energy or give up 9.23% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Excelerate Energy

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Excelerate Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excelerate Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Walker Dunlop and Excelerate Energy

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

The idea behind Walker Dunlop and Excelerate Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.