Correlation Between Walker Dunlop and Solocal Group

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

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

Diversification Opportunities for Walker Dunlop and Solocal Group

-0.39

Correlation Coefficient

Walker Dunlop  Solocal Group

Very good diversification

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

Pair Corralation between Walker Dunlop and Solocal Group

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 36.14 times less return on investment than Solocal Group. But when comparing it to its historical volatility, Walker Dunlop is 48.13 times less risky than Solocal Group. It trades about 0.08 of its potential returns per unit of risk. Solocal Group SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  473.00  in Solocal Group SA on September 3, 2024 and sell it today you would lose (203.00) from holding Solocal Group SA or give up 42.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.9%
Values	Daily Returns

Walker Dunlop  vs.  Solocal Group SA

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.

Solocal Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walker Dunlop and Solocal Group

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

The idea behind Walker Dunlop and Solocal Group SA 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.