Correlation Between Walker Dunlop and Walmart

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

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

Diversification Opportunities for Walker Dunlop and Walmart

0.26

Correlation Coefficient

Walker Dunlop  Walmart

Modest diversification

The 3 months correlation between Walker and Walmart is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Walmart go up and down completely randomly.

Pair Corralation between Walker Dunlop and Walmart

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.62 times less return on investment than Walmart. In addition to that, Walker Dunlop is 1.55 times more volatile than Walmart. It trades about 0.05 of its total potential returns per unit of risk. Walmart is currently generating about 0.26 per unit of volatility. If you would invest  7,723  in Walmart on August 30, 2024 and sell it today you would earn a total of  1,465  from holding Walmart or generate 18.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Walmart

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.

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Walmart

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

The idea behind Walker Dunlop and Walmart 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.