Correlation Between Walker Dunlop and Torrid Holdings

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Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Torrid 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 Torrid 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 Torrid Holdings, you can compare the effects of market volatilities on Walker Dunlop and Torrid 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 Torrid Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Torrid Holdings.

Diversification Opportunities for Walker Dunlop and Torrid Holdings

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Walker and Torrid is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Torrid Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torrid Holdings 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 Torrid Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torrid Holdings has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Torrid Holdings go up and down completely randomly.

Pair Corralation between Walker Dunlop and Torrid Holdings

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 12.94 times less return on investment than Torrid Holdings. But when comparing it to its historical volatility, Walker Dunlop is 1.82 times less risky than Torrid Holdings. It trades about 0.04 of its potential returns per unit of risk. Torrid Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Torrid Holdings on August 28, 2024 and sell it today you would earn a total of  66.00  from holding Torrid Holdings or generate 18.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  Torrid Holdings

 Performance 
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 6 (%) 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.
Torrid Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Torrid Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Walker Dunlop and Torrid Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and Torrid Holdings

The main advantage of trading using opposite Walker Dunlop and Torrid Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Torrid 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 Torrid Holdings will offset losses from the drop in Torrid Holdings' long position.
The idea behind Walker Dunlop and Torrid Holdings 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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