Correlation Between Walker Dunlop and Western Investment
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Western Investment 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 Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and Western Investment, you can compare the effects of market volatilities on Walker Dunlop and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Western Investment.
Diversification Opportunities for Walker Dunlop and Western Investment
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Walker and Western is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Western Investment go up and down completely randomly.
Pair Corralation between Walker Dunlop and Western Investment
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.19 times less return on investment than Western Investment. But when comparing it to its historical volatility, Walker Dunlop is 1.81 times less risky than Western Investment. It trades about 0.04 of its potential returns per unit of risk. Western Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Western Investment on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Western Investment or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. Western Investment
Performance |
| Timeline |
| Walker Dunlop |
| Western Investment |
Walker Dunlop and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and Western Investment
The main advantage of trading using opposite Walker Dunlop and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment'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 |
| Western Investment vs. iShares Canadian HYBrid | Western Investment vs. Brompton European Dividend | Western Investment vs. Solar Alliance Energy | Western Investment vs. PHN Multi Style All Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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