Correlation Between Walker Dunlop and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Eagle Materials 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 Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Eagle Materials, you can compare the effects of market volatilities on Walker Dunlop and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Eagle Materials.
Diversification Opportunities for Walker Dunlop and Eagle Materials
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and Eagle is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Eagle Materials go up and down completely randomly.
Pair Corralation between Walker Dunlop and Eagle Materials
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.84 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, Walker Dunlop is 1.31 times less risky than Eagle Materials. It trades about 0.08 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,552 in Eagle Materials on August 25, 2024 and sell it today you would earn a total of 7,848 from holding Eagle Materials or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.69% |
| Values | Daily Returns |
Walker Dunlop vs. Eagle Materials
Performance |
| Timeline |
| Walker Dunlop |
| Eagle Materials |
Walker Dunlop and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Eagle Materials
The main advantage of trading using opposite Walker Dunlop and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Walker Dunlop vs. Mr Cooper Group | Walker Dunlop vs. Velocity Financial Llc | Walker Dunlop vs. Security National Financial | Walker Dunlop vs. Encore Capital Group |
| Eagle Materials vs. Compagnie de Saint Gobain | Eagle Materials vs. HeidelbergCement AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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