Correlation Between Walker Dunlop and American Funds
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and American Funds Smallcap, you can compare the effects of market volatilities on Walker Dunlop and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and American Funds.
Diversification Opportunities for Walker Dunlop and American Funds
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walker and American is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and American Funds Smallcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Smallcap 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Smallcap has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and American Funds go up and down completely randomly.
Pair Corralation between Walker Dunlop and American Funds
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.42 times more return on investment than American Funds. However, Walker Dunlop is 2.42 times more volatile than American Funds Smallcap. It trades about 0.04 of its potential returns per unit of risk. American Funds Smallcap is currently generating about 0.05 per unit of risk. If you would invest 7,931 in Walker Dunlop on August 31, 2024 and sell it today you would earn a total of 3,151 from holding Walker Dunlop or generate 39.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. American Funds Smallcap
Performance |
| Timeline |
| Walker Dunlop |
| American Funds Smallcap |
Walker Dunlop and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and American Funds
The main advantage of trading using opposite Walker Dunlop and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. New World Fund | American Funds vs. Washington Mutual Investors | American Funds vs. Europacific Growth Fund | American Funds vs. New Perspective Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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