Correlation Between Walker Dunlop and US Physical

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

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

Diversification Opportunities for Walker Dunlop and US Physical

-0.52

Correlation Coefficient

Walker Dunlop  US Physical

Excellent diversification

The 3 months correlation between Walker and UPH is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and US Physical Therapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physical Therapy 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 US Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physical Therapy has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and US Physical go up and down completely randomly.

Pair Corralation between Walker Dunlop and US Physical

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the US Physical. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.45 times less risky than US Physical. The stock trades about -0.14 of its potential returns per unit of risk. The US Physical Therapy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,014  in US Physical Therapy on October 8, 2024 and sell it today you would earn a total of  1,536  from holding US Physical Therapy or generate 21.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Walker Dunlop  vs.  US Physical Therapy

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.

US Physical Therapy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Physical Therapy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, US Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and US Physical

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

The idea behind Walker Dunlop and US Physical Therapy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.