Correlation Between Walker Dunlop and Evotec SE

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

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

Diversification Opportunities for Walker Dunlop and Evotec SE

-0.21

Correlation Coefficient

Walker Dunlop  Evotec SE

Very good diversification

The 3 months correlation between Walker and Evotec is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE ADR has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Evotec SE go up and down completely randomly.

Pair Corralation between Walker Dunlop and Evotec SE

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 6.54 times less return on investment than Evotec SE. But when comparing it to its historical volatility, Walker Dunlop is 3.49 times less risky than Evotec SE. It trades about 0.06 of its potential returns per unit of risk. Evotec SE ADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Evotec SE ADR on September 3, 2024 and sell it today you would earn a total of  124.00  from holding Evotec SE ADR or generate 35.94% return on investment over 90 days.

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

Walker Dunlop  vs.  Evotec SE ADR

Walker Dunlop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) 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.

Evotec SE ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Evotec SE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Evotec SE

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

The idea behind Walker Dunlop and Evotec SE ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.