Correlation Between Walker Dunlop and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Northern Lights 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 Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Northern Lights, you can compare the effects of market volatilities on Walker Dunlop and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Northern Lights.
Diversification Opportunities for Walker Dunlop and Northern Lights
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and Northern is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Northern Lights go up and down completely randomly.
Pair Corralation between Walker Dunlop and Northern Lights
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 4.6 times more return on investment than Northern Lights. However, Walker Dunlop is 4.6 times more volatile than Northern Lights. It trades about 0.08 of its potential returns per unit of risk. Northern Lights is currently generating about 0.12 per unit of risk. If you would invest 9,481 in Walker Dunlop on August 29, 2024 and sell it today you would earn a total of 1,601 from holding Walker Dunlop or generate 16.89% 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. Northern Lights
Performance |
| Timeline |
| Walker Dunlop |
| Northern Lights |
Walker Dunlop and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Northern Lights
The main advantage of trading using opposite Walker Dunlop and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' 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 |
| Northern Lights vs. WisdomTree Interest Rate | Northern Lights vs. WisdomTree SmallCap Quality | Northern Lights vs. WisdomTree Emerging Markets | Northern Lights vs. WisdomTree Emerging Markets |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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