Correlation Between Walker Dunlop and DISCOVER

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

Diversification Opportunities for Walker Dunlop and DISCOVER

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Walker and DISCOVER is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and DISCOVER FINL SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISCOVER FINL SVCS 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 DISCOVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISCOVER FINL SVCS has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and DISCOVER go up and down completely randomly.

Pair Corralation between Walker Dunlop and DISCOVER

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the DISCOVER. In addition to that, Walker Dunlop is 19.17 times more volatile than DISCOVER FINL SVCS. It trades about 0.0 of its total potential returns per unit of risk. DISCOVER FINL SVCS is currently generating about 0.0 per unit of volatility. If you would invest  9,992  in DISCOVER FINL SVCS on August 28, 2024 and sell it today you would lose (1.00) from holding DISCOVER FINL SVCS or give up 0.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy55.81%
ValuesDaily Returns

Walker Dunlop  vs.  DISCOVER FINL SVCS

 Performance 
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
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.
DISCOVER FINL SVCS 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in DISCOVER FINL SVCS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DISCOVER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walker Dunlop and DISCOVER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and DISCOVER

The main advantage of trading using opposite Walker Dunlop and DISCOVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, DISCOVER 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 DISCOVER will offset losses from the drop in DISCOVER's long position.
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The idea behind Walker Dunlop and DISCOVER FINL SVCS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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