Correlation Between Walker Dunlop and Lloyds Banking

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

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

Diversification Opportunities for Walker Dunlop and Lloyds Banking

-0.29

Correlation Coefficient

Walker Dunlop  Lloyds Banking

Very good diversification

The 3 months correlation between Walker and Lloyds is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Lloyds Banking go up and down completely randomly.

Pair Corralation between Walker Dunlop and Lloyds Banking

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 6.14 times more return on investment than Lloyds Banking. However, Walker Dunlop is 6.14 times more volatile than Lloyds Banking Group. It trades about 0.06 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.07 per unit of risk. If you would invest  10,435  in Walker Dunlop on September 2, 2024 and sell it today you would earn a total of  583.00  from holding Walker Dunlop or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Walker Dunlop  vs.  Lloyds Banking Group

Walker Dunlop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) 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.

Lloyds Banking Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lloyds Banking Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lloyds Banking is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walker Dunlop and Lloyds Banking

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

The idea behind Walker Dunlop and Lloyds Banking Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.