Correlation Between Walker Dunlop and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Eaton PLC 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 Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Eaton PLC, you can compare the effects of market volatilities on Walker Dunlop and Eaton PLC 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 Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Eaton PLC.
Diversification Opportunities for Walker Dunlop and Eaton PLC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and Eaton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Eaton PLC go up and down completely randomly.
Pair Corralation between Walker Dunlop and Eaton PLC
Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Eaton PLC. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.48 times less risky than Eaton PLC. The stock trades about -0.08 of its potential returns per unit of risk. The Eaton PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 34,454 in Eaton PLC on August 27, 2024 and sell it today you would earn a total of 3,214 from holding Eaton PLC or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. Eaton PLC
Performance |
| Timeline |
| Walker Dunlop |
| Eaton PLC |
Walker Dunlop and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Eaton PLC
The main advantage of trading using opposite Walker Dunlop and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Eaton PLC 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 Eaton PLC will offset losses from the drop in Eaton PLC's 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 |
| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |