Correlation Between Solo Brands and Walker Dunlop

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

Diversification Opportunities for Solo Brands and Walker Dunlop

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solo Brands and Walker is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands Inc and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and Walker Dunlop go up and down completely randomly.

Pair Corralation between Solo Brands and Walker Dunlop

Considering the 90-day investment horizon Solo Brands is expected to generate 3.83 times more return on investment than Walker Dunlop. However, Solo Brands is 3.83 times more volatile than Walker Dunlop. It trades about 0.2 of its potential returns per unit of risk. Walker Dunlop is currently generating about 0.39 per unit of risk. If you would invest  439.00  in Solo Brands on May 19, 2022 and sell it today you would earn a total of  128.00  from holding Solo Brands or generate 29.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Solo Brands Inc  vs.  Walker Dunlop

 Performance (%) 
       Timeline  
Solo Brands 
Solo Brands Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Solo Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Solo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Solo Brands 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

Solo Brands and Walker Dunlop Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solo Brands and Walker Dunlop

The main advantage of trading using opposite Solo Brands and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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 Solo Brands 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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