Correlation Between Walker Dunlop and Equity Income

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Equity 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 Equity 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 Equity Income Fund, you can compare the effects of market volatilities on Walker Dunlop and Equity 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 Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Equity Income.

Diversification Opportunities for Walker Dunlop and Equity Income

0.0

Correlation Coefficient

Walker Dunlop  Equity Income

Pay attention - limited upside

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

Pair Corralation between Walker Dunlop and Equity Income

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.18 times less return on investment than Equity Income. In addition to that, Walker Dunlop is 2.62 times more volatile than Equity Income Fund. It trades about 0.04 of its total potential returns per unit of risk. Equity Income Fund is currently generating about 0.14 per unit of volatility. If you would invest  4,222  in Equity Income Fund on September 12, 2024 and sell it today you would earn a total of  226.00  from holding Equity Income Fund or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Equity Income Fund

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) 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.

Equity Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Income Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Equity Income 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 Equity Income

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

The idea behind Walker Dunlop and Equity Income Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.