Correlation Between Walker Dunlop and Poplar Forest
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Poplar Forest 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 Poplar Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Poplar Forest Nerstone, you can compare the effects of market volatilities on Walker Dunlop and Poplar Forest 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 Poplar Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Poplar Forest.
Diversification Opportunities for Walker Dunlop and Poplar Forest
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and Poplar is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Poplar Forest Nerstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poplar Forest Nerstone 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 Poplar Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poplar Forest Nerstone has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Poplar Forest go up and down completely randomly.
Pair Corralation between Walker Dunlop and Poplar Forest
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.66 times more return on investment than Poplar Forest. However, Walker Dunlop is 3.66 times more volatile than Poplar Forest Nerstone. It trades about 0.04 of its potential returns per unit of risk. Poplar Forest Nerstone is currently generating about 0.05 per unit of risk. If you would invest 7,970 in Walker Dunlop on August 27, 2024 and sell it today you would earn a total of 2,879 from holding Walker Dunlop or generate 36.12% 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. Poplar Forest Nerstone
Performance |
| Timeline |
| Walker Dunlop |
| Poplar Forest Nerstone |
Walker Dunlop and Poplar Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Poplar Forest
The main advantage of trading using opposite Walker Dunlop and Poplar Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Poplar Forest 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 Poplar Forest will offset losses from the drop in Poplar Forest'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 |
| Poplar Forest vs. Ab Impact Municipal | Poplar Forest vs. Franklin High Yield | Poplar Forest vs. California High Yield Municipal | Poplar Forest vs. Transamerica Intermediate Muni |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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