Correlation Between Walker Dunlop and NewWave GBP

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

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

Diversification Opportunities for Walker Dunlop and NewWave GBP

0.19

Correlation Coefficient

Walker Dunlop  NewWave GBP

Average diversification

The 3 months correlation between Walker and NewWave is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and NewWave GBP Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave GBP Currency 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 NewWave GBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave GBP Currency has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and NewWave GBP go up and down completely randomly.

Pair Corralation between Walker Dunlop and NewWave GBP

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the NewWave GBP. In addition to that, Walker Dunlop is 2.98 times more volatile than NewWave GBP Currency. It trades about -0.09 of its total potential returns per unit of risk. NewWave GBP Currency is currently generating about 0.01 per unit of volatility. If you would invest  235,500  in NewWave GBP Currency on December 23, 2024 and sell it today you would earn a total of  1,000.00  from holding NewWave GBP Currency or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Walker Dunlop  vs.  NewWave GBP Currency

Walker Dunlop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

NewWave GBP Currency

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NewWave GBP Currency are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, NewWave GBP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and NewWave GBP

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

The idea behind Walker Dunlop and NewWave GBP Currency 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.