Correlation Between Walker Dunlop and NEM
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and NEM 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 NEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and NEM, you can compare the effects of market volatilities on Walker Dunlop and NEM 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 NEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and NEM.
Diversification Opportunities for Walker Dunlop and NEM
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Walker and NEM is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and NEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM 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 NEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and NEM go up and down completely randomly.
Pair Corralation between Walker Dunlop and NEM
Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the NEM. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 3.79 times less risky than NEM. The stock trades about -0.08 of its potential returns per unit of risk. The NEM is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1.69 in NEM on August 27, 2024 and sell it today you would earn a total of 0.79 from holding NEM or generate 46.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. NEM
Performance |
| Timeline |
| Walker Dunlop |
| NEM |
Walker Dunlop and NEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and NEM
The main advantage of trading using opposite Walker Dunlop and NEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, NEM 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 NEM will offset losses from the drop in NEM'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 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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