Correlation Between Walker Dunlop and Capital World
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Capital World 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 Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Capital World Growth, you can compare the effects of market volatilities on Walker Dunlop and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Capital World.
Diversification Opportunities for Walker Dunlop and Capital World
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walker and Capital is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Capital World go up and down completely randomly.
Pair Corralation between Walker Dunlop and Capital World
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.93 times more return on investment than Capital World. However, Walker Dunlop is 2.93 times more volatile than Capital World Growth. It trades about 0.04 of its potential returns per unit of risk. Capital World Growth is currently generating about 0.08 per unit of risk. If you would invest 8,063 in Walker Dunlop on August 24, 2024 and sell it today you would earn a total of 2,786 from holding Walker Dunlop or generate 34.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. Capital World Growth
Performance |
| Timeline |
| Walker Dunlop |
| Capital World Growth |
Walker Dunlop and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Capital World
The main advantage of trading using opposite Walker Dunlop and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Walker Dunlop vs. Encore Capital Group | Walker Dunlop vs. Federal Home Loan | Walker Dunlop vs. CNFinance Holdings | Walker Dunlop vs. Greystone Housing Impact |
| Capital World vs. Great West Loomis Sayles | Capital World vs. Small Cap Value Series | Capital World vs. Ultramid Cap Profund Ultramid Cap | Capital World vs. Ab Discovery Value |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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