Correlation Between Walker Dunlop and Realty Income

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

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

Diversification Opportunities for Walker Dunlop and Realty Income

-0.73

Correlation Coefficient

Walker Dunlop  Realty Income

Pay attention - limited upside

The 3 months correlation between Walker and Realty is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Realty Income go up and down completely randomly.

Pair Corralation between Walker Dunlop and Realty Income

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Realty Income. In addition to that, Walker Dunlop is 1.63 times more volatile than Realty Income. It trades about -0.08 of its total potential returns per unit of risk. Realty Income is currently generating about 0.13 per unit of volatility. If you would invest  5,190  in Realty Income on December 27, 2024 and sell it today you would earn a total of  466.00  from holding Realty Income or generate 8.98% return on investment over 90 days.

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

Walker Dunlop  vs.  Realty Income

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.

Realty Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walker Dunlop and Realty Income

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

The idea behind Walker Dunlop and Realty Income 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.