Correlation Between Walker Dunlop and ALVGR

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

By analyzing existing cross correlation between Walker Dunlop and ALVGR 35, you can compare the effects of market volatilities on Walker Dunlop and ALVGR 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 ALVGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and ALVGR.

Diversification Opportunities for Walker Dunlop and ALVGR

0.2

Correlation Coefficient

Walker Dunlop  ALVGR

Modest diversification

The 3 months correlation between Walker and ALVGR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and ALVGR 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALVGR 35 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 ALVGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALVGR 35 has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and ALVGR go up and down completely randomly.

Pair Corralation between Walker Dunlop and ALVGR

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.35 times more return on investment than ALVGR. However, Walker Dunlop is 2.83 times less risky than ALVGR. It trades about 0.11 of its potential returns per unit of risk. ALVGR 35 is currently generating about -0.36 per unit of risk. If you would invest  10,674  in Walker Dunlop on September 4, 2024 and sell it today you would earn a total of  347.00  from holding Walker Dunlop or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

Walker Dunlop  vs.  ALVGR 35

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) 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.

ALVGR 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALVGR 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for ALVGR 35 investors.

Pair Trading with Walker Dunlop and ALVGR

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

The idea behind Walker Dunlop and ALVGR 35 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.