Correlation Between Walker Dunlop and First Trust
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and First Trust NASDAQ 100, you can compare the effects of market volatilities on Walker Dunlop and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and First Trust.
Diversification Opportunities for Walker Dunlop and First Trust
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walker and First is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and First Trust NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NASDAQ has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and First Trust go up and down completely randomly.
Pair Corralation between Walker Dunlop and First Trust
Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the First Trust. In addition to that, Walker Dunlop is 1.82 times more volatile than First Trust NASDAQ 100. It trades about -0.02 of its total potential returns per unit of risk. First Trust NASDAQ 100 is currently generating about 0.12 per unit of volatility. If you would invest 12,545 in First Trust NASDAQ 100 on August 29, 2024 and sell it today you would earn a total of 606.00 from holding First Trust NASDAQ 100 or generate 4.83% 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. First Trust NASDAQ 100
Performance |
| Timeline |
| Walker Dunlop |
| First Trust NASDAQ |
Walker Dunlop and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and First Trust
The main advantage of trading using opposite Walker Dunlop and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. First Trust NASDAQ 100 | First Trust vs. First Trust NASDAQ 100 Technology | First Trust vs. Direxion NASDAQ 100 Equal | First Trust vs. First Trust Large |
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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