Correlation Between Walker Dunlop and Thyssenkrupp

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

Diversification Opportunities for Walker Dunlop and Thyssenkrupp

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Walker and Thyssenkrupp is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Thyssenkrupp go up and down completely randomly.

Pair Corralation between Walker Dunlop and Thyssenkrupp

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.13 times less return on investment than Thyssenkrupp. But when comparing it to its historical volatility, Walker Dunlop is 1.87 times less risky than Thyssenkrupp. It trades about 0.05 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  323.00  in thyssenkrupp AG on August 29, 2024 and sell it today you would earn a total of  53.00  from holding thyssenkrupp AG or generate 16.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.46%
ValuesDaily Returns

Walker Dunlop  vs.  thyssenkrupp AG

 Performance 
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
thyssenkrupp AG 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Thyssenkrupp reported solid returns over the last few months and may actually be approaching a breakup point.

Walker Dunlop and Thyssenkrupp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and Thyssenkrupp

The main advantage of trading using opposite Walker Dunlop and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.
The idea behind Walker Dunlop and thyssenkrupp AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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