Correlation Between Walker Dunlop and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and NexGen Energy, you can compare the effects of market volatilities on Walker Dunlop and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and NexGen Energy.
Diversification Opportunities for Walker Dunlop and NexGen Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and NexGen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and NexGen Energy go up and down completely randomly.
Pair Corralation between Walker Dunlop and NexGen Energy
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.1 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, Walker Dunlop is 1.68 times less risky than NexGen Energy. It trades about 0.04 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 381.00 in NexGen Energy on September 5, 2024 and sell it today you would earn a total of 391.00 from holding NexGen Energy or generate 102.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.21% |
| Values | Daily Returns |
Walker Dunlop vs. NexGen Energy
Performance |
| Timeline |
| Walker Dunlop |
| NexGen Energy |
Walker Dunlop and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and NexGen Energy
The main advantage of trading using opposite Walker Dunlop and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| Walker Dunlop vs. Mr Cooper Group | Walker Dunlop vs. Security National Financial | Walker Dunlop vs. Encore Capital Group | Walker Dunlop vs. Timbercreek Financial Corp |
| NexGen Energy vs. Texas Roadhouse | NexGen Energy vs. Fukuyama Transporting Co | NexGen Energy vs. Gaztransport Technigaz SA | NexGen Energy vs. Lion One Metals |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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