Correlation Between Walker Dunlop and American Beacon
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and American Beacon Funds, you can compare the effects of market volatilities on Walker Dunlop and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and American Beacon.
Diversification Opportunities for Walker Dunlop and American Beacon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walker and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and American Beacon Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Funds 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Funds has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and American Beacon go up and down completely randomly.
Pair Corralation between Walker Dunlop and American Beacon
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 8.61 times more return on investment than American Beacon. However, Walker Dunlop is 8.61 times more volatile than American Beacon Funds. It trades about 0.05 of its potential returns per unit of risk. American Beacon Funds is currently generating about 0.15 per unit of risk. If you would invest 7,629 in Walker Dunlop on August 30, 2024 and sell it today you would earn a total of 3,453 from holding Walker Dunlop or generate 45.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. American Beacon Funds
Performance |
| Timeline |
| Walker Dunlop |
| American Beacon Funds |
Walker Dunlop and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and American Beacon
The main advantage of trading using opposite Walker Dunlop and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. Pimco Income Fund | American Beacon vs. HUMANA INC | American Beacon vs. Aquagold International | American Beacon vs. Barloworld Ltd ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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