Correlation Between Walker Dunlop and LCI Industries
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and LCI Industries 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 LCI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and LCI Industries, you can compare the effects of market volatilities on Walker Dunlop and LCI Industries 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 LCI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and LCI Industries.
Diversification Opportunities for Walker Dunlop and LCI Industries
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and LCI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries 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 LCI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCI Industries has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and LCI Industries go up and down completely randomly.
Pair Corralation between Walker Dunlop and LCI Industries
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 6.48 times less return on investment than LCI Industries. But when comparing it to its historical volatility, Walker Dunlop is 1.39 times less risky than LCI Industries. It trades about 0.04 of its potential returns per unit of risk. LCI Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 11,628 in LCI Industries on August 28, 2024 and sell it today you would earn a total of 1,042 from holding LCI Industries or generate 8.96% 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. LCI Industries
Performance |
| Timeline |
| Walker Dunlop |
| LCI Industries |
Walker Dunlop and LCI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and LCI Industries
The main advantage of trading using opposite Walker Dunlop and LCI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, LCI Industries 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 LCI Industries will offset losses from the drop in LCI Industries' 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 |
| LCI Industries vs. MCBC Holdings | LCI Industries vs. BRP Inc | LCI Industries vs. Malibu Boats | LCI Industries vs. Winnebago Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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