Correlation Between Walker Dunlop and IShares Core

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and IShares Core 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 Core 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 Core MSCI, you can compare the effects of market volatilities on Walker Dunlop and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and IShares Core.

Diversification Opportunities for Walker Dunlop and IShares Core

0.69

Correlation Coefficient

Walker Dunlop  IShares Core

Poor diversification

The 3 months correlation between Walker and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and IShares Core go up and down completely randomly.

Pair Corralation between Walker Dunlop and IShares Core

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.55 times more return on investment than IShares Core. However, Walker Dunlop is 1.55 times more volatile than iShares Core MSCI. It trades about 0.08 of its potential returns per unit of risk. iShares Core MSCI is currently generating about -0.11 per unit of risk. If you would invest  10,674  in Walker Dunlop on September 4, 2024 and sell it today you would earn a total of  242.00  from holding Walker Dunlop or generate 2.27% 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.  iShares Core MSCI

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 Core MSCI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, IShares Core 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 IShares Core

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

The idea behind Walker Dunlop and iShares Core MSCI 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.