Correlation Between Walker Dunlop and RFM Corp
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and RFM Corp 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 RFM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and RFM Corp, you can compare the effects of market volatilities on Walker Dunlop and RFM Corp 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 RFM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and RFM Corp.
Diversification Opportunities for Walker Dunlop and RFM Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walker and RFM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and RFM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFM Corp 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 RFM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFM Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and RFM Corp go up and down completely randomly.
Pair Corralation between Walker Dunlop and RFM Corp
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.96 times less return on investment than RFM Corp. But when comparing it to its historical volatility, Walker Dunlop is 1.12 times less risky than RFM Corp. It trades about 0.06 of its potential returns per unit of risk. RFM Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 270.00 in RFM Corp on September 1, 2024 and sell it today you would earn a total of 120.00 from holding RFM Corp or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.81% |
| Values | Daily Returns |
Walker Dunlop vs. RFM Corp
Performance |
| Timeline |
| Walker Dunlop |
| RFM Corp |
Walker Dunlop and RFM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and RFM Corp
The main advantage of trading using opposite Walker Dunlop and RFM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, RFM Corp 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 RFM Corp will offset losses from the drop in RFM Corp'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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