Correlation Between Walker Dunlop and Newcore Gold

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

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

Diversification Opportunities for Walker Dunlop and Newcore Gold

0.49

Correlation Coefficient

Walker Dunlop  Newcore Gold

Very weak diversification

The 3 months correlation between Walker and Newcore is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Newcore Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcore Gold 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 Newcore Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcore Gold has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Newcore Gold go up and down completely randomly.

Pair Corralation between Walker Dunlop and Newcore Gold

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 59.61 times less return on investment than Newcore Gold. But when comparing it to its historical volatility, Walker Dunlop is 2.48 times less risky than Newcore Gold. It trades about 0.0 of its potential returns per unit of risk. Newcore Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Newcore Gold on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Newcore Gold or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Newcore Gold

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Newcore Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newcore Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newcore Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Newcore Gold

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

The idea behind Walker Dunlop and Newcore Gold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.