Correlation Between Walker Dunlop and 02005NBM1

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and 02005NBM1 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 02005NBM1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and ALLY 47, you can compare the effects of market volatilities on Walker Dunlop and 02005NBM1 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 02005NBM1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and 02005NBM1.

Diversification Opportunities for Walker Dunlop and 02005NBM1

0.24

Correlation Coefficient

Walker Dunlop  02005NBM1

Modest diversification

The 3 months correlation between Walker and 02005NBM1 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and ALLY 47 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 02005NBM1 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 02005NBM1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 02005NBM1 has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and 02005NBM1 go up and down completely randomly.

Pair Corralation between Walker Dunlop and 02005NBM1

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.99 times more return on investment than 02005NBM1. However, Walker Dunlop is 1.01 times less risky than 02005NBM1. It trades about -0.04 of its potential returns per unit of risk. ALLY 47 is currently generating about -0.32 per unit of risk. If you would invest  9,738  in Walker Dunlop on October 22, 2024 and sell it today you would lose (204.00) from holding Walker Dunlop or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Walker Dunlop  vs.  ALLY 47

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.

02005NBM1

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALLY 47 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 02005NBM1 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 02005NBM1

The main advantage of trading using opposite Walker Dunlop and 02005NBM1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, 02005NBM1 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 02005NBM1 will offset losses from the drop in 02005NBM1's long position.

The idea behind Walker Dunlop and ALLY 47 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.