Correlation Between Walker Dunlop and Nrg Energy

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

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

Diversification Opportunities for Walker Dunlop and Nrg Energy

0.0

Correlation Coefficient

Walker Dunlop  Nrg Energy

Pay attention - limited upside

The 3 months correlation between Walker and Nrg is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Nrg Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nrg Energy 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 Nrg Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nrg Energy has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Nrg Energy go up and down completely randomly.

Pair Corralation between Walker Dunlop and Nrg Energy

If you would invest (100.00) in Nrg Energy on October 7, 2024 and sell it today you would earn a total of  100.00  from holding Nrg Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walker Dunlop  vs.  Nrg Energy

Walker Dunlop

Risk-Adjusted Performance

0 of 100

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.

Nrg Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nrg Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nrg Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and Nrg Energy

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

The idea behind Walker Dunlop and Nrg Energy 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.