Correlation Between Walker Dunlop and Putnam Small

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

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

Diversification Opportunities for Walker Dunlop and Putnam Small

0.7

Correlation Coefficient

Walker Dunlop  Putnam Small

Poor diversification

The 3 months correlation between Walker and Putnam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Putnam Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Small Cap 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 Putnam Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Small Cap has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Putnam Small go up and down completely randomly.

Pair Corralation between Walker Dunlop and Putnam Small

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Putnam Small. In addition to that, Walker Dunlop is 1.43 times more volatile than Putnam Small Cap. It trades about -0.1 of its total potential returns per unit of risk. Putnam Small Cap is currently generating about 0.0 per unit of volatility. If you would invest  1,729  in Putnam Small Cap on October 23, 2024 and sell it today you would lose (10.00) from holding Putnam Small Cap or give up 0.58% 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.  Putnam Small Cap

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

Putnam Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Small 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 Putnam Small

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

The idea behind Walker Dunlop and Putnam Small Cap 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.