Correlation Between Walker Dunlop and FlexShares Morningstar

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

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

Diversification Opportunities for Walker Dunlop and FlexShares Morningstar

0.62

Correlation Coefficient

Walker Dunlop  FlexShares Morningstar

Poor diversification

The 3 months correlation between Walker and FlexShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and FlexShares Morningstar Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Morningstar 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 FlexShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Morningstar has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and FlexShares Morningstar go up and down completely randomly.

Pair Corralation between Walker Dunlop and FlexShares Morningstar

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.77 times more return on investment than FlexShares Morningstar. However, Walker Dunlop is 1.77 times more volatile than FlexShares Morningstar Global. It trades about 0.05 of its potential returns per unit of risk. FlexShares Morningstar Global is currently generating about -0.04 per unit of risk. If you would invest  10,641  in Walker Dunlop on August 30, 2024 and sell it today you would earn a total of  441.00  from holding Walker Dunlop or generate 4.14% 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.  FlexShares Morningstar Global

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) 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.

FlexShares Morningstar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Morningstar Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FlexShares Morningstar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walker Dunlop and FlexShares Morningstar

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

The idea behind Walker Dunlop and FlexShares Morningstar Global 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 CEOs Directory module to screen CEOs from public companies around the world.