Correlation Between Walker Dunlop and OFS Credit

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Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and OFS Credit 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 OFS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and OFS Credit, you can compare the effects of market volatilities on Walker Dunlop and OFS Credit 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 OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and OFS Credit.

Diversification Opportunities for Walker Dunlop and OFS Credit

WalkerOFSDiversified AwayWalkerOFSDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Walker and OFS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit 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 OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and OFS Credit go up and down completely randomly.

Pair Corralation between Walker Dunlop and OFS Credit

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the OFS Credit. In addition to that, Walker Dunlop is 1.87 times more volatile than OFS Credit. It trades about -0.01 of its total potential returns per unit of risk. OFS Credit is currently generating about 0.08 per unit of volatility. If you would invest  568.00  in OFS Credit on November 26, 2024 and sell it today you would earn a total of  135.00  from holding OFS Credit or generate 23.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  OFS Credit

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.15WD OCCI
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb859095100105110115
OFS Credit 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, OFS Credit is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.86.977.17.2

Walker Dunlop and OFS Credit Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.44-2.57-1.71-0.850.00.711.432.152.86 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15WD OCCI
       Returns  

Pair Trading with Walker Dunlop and OFS Credit

The main advantage of trading using opposite Walker Dunlop and OFS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, OFS Credit 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 OFS Credit will offset losses from the drop in OFS Credit's long position.
The idea behind Walker Dunlop and OFS Credit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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