Correlation Between Walker Dunlop and UWM Holdings

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

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

Diversification Opportunities for Walker Dunlop and UWM Holdings

-0.27

Correlation Coefficient

Walker Dunlop  UWM Holdings

Very good diversification

The 3 months correlation between Walker and UWM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and UWM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UWM Holdings Corp 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 UWM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UWM Holdings Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and UWM Holdings go up and down completely randomly.

Pair Corralation between Walker Dunlop and UWM Holdings

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.41 times less return on investment than UWM Holdings. But when comparing it to its historical volatility, Walker Dunlop is 1.33 times less risky than UWM Holdings. It trades about 0.04 of its potential returns per unit of risk. UWM Holdings Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  416.00  in UWM Holdings Corp on August 31, 2024 and sell it today you would earn a total of  240.00  from holding UWM Holdings Corp or generate 57.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  UWM Holdings Corp

Walker Dunlop

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in December 2024.

UWM Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UWM Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Walker Dunlop and UWM Holdings

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

The idea behind Walker Dunlop and UWM Holdings Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.