Correlation Between Walker Dunlop and Postal Realty

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

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

Diversification Opportunities for Walker Dunlop and Postal Realty

0.75

Correlation Coefficient

Walker Dunlop  Postal Realty

Poor diversification

The 3 months correlation between Walker and Postal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Postal Realty go up and down completely randomly.

Pair Corralation between Walker Dunlop and Postal Realty

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Postal Realty. In addition to that, Walker Dunlop is 1.61 times more volatile than Postal Realty Trust. It trades about -0.21 of its total potential returns per unit of risk. Postal Realty Trust is currently generating about -0.14 per unit of volatility. If you would invest  1,392  in Postal Realty Trust on November 28, 2024 and sell it today you would lose (140.00) from holding Postal Realty Trust or give up 10.06% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Postal Realty Trust

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Postal Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Postal Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Walker Dunlop and Postal Realty

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

The idea behind Walker Dunlop and Postal Realty Trust 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.