Correlation Between Walker Dunlop and IShares Core

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

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

Diversification Opportunities for Walker Dunlop and IShares Core

0.4

Correlation Coefficient

Walker Dunlop  IShares Core

Very weak diversification

The 3 months correlation between Walker and IShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and IShares Core go up and down completely randomly.

Pair Corralation between Walker Dunlop and IShares Core

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the IShares Core. In addition to that, Walker Dunlop is 2.09 times more volatile than iShares Core SP. It trades about -0.08 of its total potential returns per unit of risk. iShares Core SP is currently generating about -0.11 per unit of volatility. If you would invest  60,126  in iShares Core SP on December 29, 2024 and sell it today you would lose (3,916) from holding iShares Core SP or give up 6.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Walker Dunlop  vs.  iShares Core SP

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.

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Walker Dunlop and IShares Core

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

The idea behind Walker Dunlop and iShares Core SP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.