Correlation Between Walker Dunlop and Treasury Wine

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

Diversification Opportunities for Walker Dunlop and Treasury Wine

WalkerTreasuryDiversified AwayWalkerTreasuryDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Walker and Treasury is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Treasury Wine go up and down completely randomly.

Pair Corralation between Walker Dunlop and Treasury Wine

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Treasury Wine. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.17 times less risky than Treasury Wine. The stock trades about -0.42 of its potential returns per unit of risk. The Treasury Wine Estates is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  633.00  in Treasury Wine Estates on November 27, 2024 and sell it today you would earn a total of  14.00  from holding Treasury Wine Estates or generate 2.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Walker Dunlop  vs.  Treasury Wine Estates

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.15WD T7W
       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
Treasury Wine Estates 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.26.36.46.56.66.76.86.977.1

Walker Dunlop and Treasury Wine Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.44-2.57-1.71-0.85-0.010.71.412.132.853.57 0.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15WD T7W
       Returns  

Pair Trading with Walker Dunlop and Treasury Wine

The main advantage of trading using opposite Walker Dunlop and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.
The idea behind Walker Dunlop and Treasury Wine Estates 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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