Correlation Between Walker Dunlop and Waste Management

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

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

Diversification Opportunities for Walker Dunlop and Waste Management

0.11

Correlation Coefficient

Walker Dunlop  Waste Management

Average diversification

The 3 months correlation between Walker and Waste is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Waste Management go up and down completely randomly.

Pair Corralation between Walker Dunlop and Waste Management

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.91 times less return on investment than Waste Management. In addition to that, Walker Dunlop is 1.3 times more volatile than Waste Management. It trades about 0.07 of its total potential returns per unit of risk. Waste Management is currently generating about 0.16 per unit of volatility. If you would invest  19,029  in Waste Management on August 31, 2024 and sell it today you would earn a total of  2,591  from holding Waste Management or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Walker Dunlop  vs.  Waste Management

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.

Waste Management

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Waste Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Waste Management

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

The idea behind Walker Dunlop and Waste Management 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.