Correlation Between Walker Dunlop and IShares Utilities

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

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

Diversification Opportunities for Walker Dunlop and IShares Utilities

0.63

Correlation Coefficient

Walker Dunlop  IShares Utilities

Poor diversification

The 3 months correlation between Walker and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and iShares Utilities ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Utilities ETF 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 IShares Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Utilities ETF has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and IShares Utilities go up and down completely randomly.

Pair Corralation between Walker Dunlop and IShares Utilities

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.26 times less return on investment than IShares Utilities. In addition to that, Walker Dunlop is 1.87 times more volatile than iShares Utilities ETF. It trades about 0.11 of its total potential returns per unit of risk. iShares Utilities ETF is currently generating about 0.46 per unit of volatility. If you would invest  9,812  in iShares Utilities ETF on September 4, 2024 and sell it today you would earn a total of  745.00  from holding iShares Utilities ETF or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Walker Dunlop  vs.  iShares Utilities ETF

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.

iShares Utilities ETF

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Utilities ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish fundamental indicators, IShares Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walker Dunlop and IShares Utilities

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

The idea behind Walker Dunlop and iShares Utilities ETF 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.