Correlation Between Walker Dunlop and Vanguard Balanced

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

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

Diversification Opportunities for Walker Dunlop and Vanguard Balanced

0.23

Correlation Coefficient

Walker Dunlop  Vanguard Balanced

Modest diversification

The 3 months correlation between Walker and Vanguard is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Vanguard Balanced Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Balanced 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 Vanguard Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Balanced has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Vanguard Balanced go up and down completely randomly.

Pair Corralation between Walker Dunlop and Vanguard Balanced

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Vanguard Balanced. In addition to that, Walker Dunlop is 4.69 times more volatile than Vanguard Balanced Portfolio. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Balanced Portfolio is currently generating about 0.14 per unit of volatility. If you would invest  3,328  in Vanguard Balanced Portfolio on December 2, 2024 and sell it today you would earn a total of  85.00  from holding Vanguard Balanced Portfolio or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Walker Dunlop  vs.  Vanguard Balanced Portfolio

Walker Dunlop

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vanguard Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Balanced Portfolio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Balanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and Vanguard Balanced

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

The idea behind Walker Dunlop and Vanguard Balanced Portfolio 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.