Correlation Between Walker Dunlop and UST Inc

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

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

Diversification Opportunities for Walker Dunlop and UST Inc

0.35

Correlation Coefficient

Walker Dunlop  UST Inc

Weak diversification

The 3 months correlation between Walker and UST is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and UST Inc go up and down completely randomly.

Pair Corralation between Walker Dunlop and UST Inc

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.18 times less return on investment than UST Inc. In addition to that, Walker Dunlop is 1.51 times more volatile than Multi Units Luxembourg . It trades about 0.06 of its total potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.2 per unit of volatility. If you would invest  7,005  in Multi Units Luxembourg on September 3, 2024 and sell it today you would earn a total of  1,012  from holding Multi Units Luxembourg or generate 14.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Walker Dunlop  vs.  Multi Units Luxembourg

Walker Dunlop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Multi Units Luxembourg

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Units Luxembourg are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UST Inc sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and UST Inc

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

The idea behind Walker Dunlop and Multi Units Luxembourg 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.