Correlation Between Walker Dunlop and Hyundai

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

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

Diversification Opportunities for Walker Dunlop and Hyundai

0.39

Correlation Coefficient

Walker Dunlop  Hyundai

Weak diversification

The 3 months correlation between Walker and Hyundai is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Hyundai go up and down completely randomly.

Pair Corralation between Walker Dunlop and Hyundai

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.88 times less return on investment than Hyundai. But when comparing it to its historical volatility, Walker Dunlop is 1.03 times less risky than Hyundai. It trades about 0.02 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,878  in Hyundai Motor on October 8, 2024 and sell it today you would earn a total of  2,402  from holding Hyundai Motor or generate 83.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Walker Dunlop  vs.  Hyundai Motor

Walker Dunlop

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Walker Dunlop and Hyundai

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

The idea behind Walker Dunlop and Hyundai Motor 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.