Correlation Between Walker Dunlop and Exro Technologies

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

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

Diversification Opportunities for Walker Dunlop and Exro Technologies

0.71

Correlation Coefficient

Walker Dunlop  Exro Technologies

Poor diversification

The 3 months correlation between Walker and Exro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Exro Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exro Technologies 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 Exro Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exro Technologies has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Exro Technologies go up and down completely randomly.

Pair Corralation between Walker Dunlop and Exro Technologies

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 10.37 times less return on investment than Exro Technologies. But when comparing it to its historical volatility, Walker Dunlop is 4.55 times less risky than Exro Technologies. It trades about 0.06 of its potential returns per unit of risk. Exro Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6.30  in Exro Technologies on December 27, 2024 and sell it today you would earn a total of  1.10  from holding Exro Technologies or generate 17.46% return on investment over 90 days.

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

Walker Dunlop  vs.  Exro Technologies

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.

Exro Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exro Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Exro Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walker Dunlop and Exro Technologies

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

The idea behind Walker Dunlop and Exro Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.