Correlation Between BP PLC and Walker Dunlop

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Can any of the company-specific risk be diversified away by investing in both BP PLC and Walker Dunlop 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 BP PLC and Walker Dunlop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP PLC 0 and Walker Dunlop, you can compare the effects of market volatilities on BP PLC and Walker Dunlop 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 BP PLC with a short position of Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP PLC and Walker Dunlop.

Diversification Opportunities for BP PLC and Walker Dunlop

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BP PLC and Walker is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BP PLC 0 25 and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and BP PLC 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 BP PLC 0 are associated (or correlated) with Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of BP PLC i.e., BP PLC and Walker Dunlop go up and down completely randomly.

Pair Corralation between BP PLC and Walker Dunlop

Given the investment horizon of 90 days BP PLC is expected to generate 1.21 times less return on investment than Walker Dunlop. But when comparing it to its historical volatility, BP PLC 0 is 1.34 times less risky than Walker Dunlop. It trades about 0.43 of its potential returns per unit of risk. Walker Dunlop is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  9,844  in Walker Dunlop on May 19, 2022 and sell it today you would earn a total of  1,571  from holding Walker Dunlop or generate 15.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BP PLC 0 25  vs.  Walker Dunlop

 Performance (%) 
       Timeline  
BP PLC 0 
BP PLC Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BP PLC 0 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BP PLC may actually be approaching a critical reversion point that can send shares even higher in September 2022.

BP PLC Price Channel

Walker Dunlop 
Walker Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Walker Price Channel

BP PLC and Walker Dunlop Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BP PLC and Walker Dunlop

The main advantage of trading using opposite BP PLC and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP PLC position performs unexpectedly, Walker Dunlop 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 Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.
The idea behind BP PLC 0 and Walker Dunlop 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.

Walker Dunlop

Pair trading matchups for Walker Dunlop

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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