Correlation Between Walker Dunlop and DOW

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

Diversification Opportunities for Walker Dunlop and DOW

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Walker and DOW is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and DOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW 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 DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and DOW go up and down completely randomly.
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Pair Corralation between Walker Dunlop and DOW

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.61 times more return on investment than DOW. However, Walker Dunlop is 2.61 times more volatile than DOW. It trades about 0.07 of its potential returns per unit of risk. DOW is currently generating about 0.04 per unit of risk. If you would invest  4,584  in Walker Dunlop on April 5, 2022 and sell it today you would earn a total of  5,229  from holding Walker Dunlop or generate 114.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  DOW

 Performance (%) 
      Timeline 

Walker Dunlop and DOW Volatility Contrast

 Predicted Return Density 
      Returns 

Walker Dunlop

Pair trading matchups for Walker Dunlop

RENEWI PLC vs. Walker Dunlop
Visa vs. Walker Dunlop
Context Therapeutics vs. Walker Dunlop
Calyxt vs. Walker Dunlop
Alzamend Neuro vs. Walker Dunlop
Vmware vs. Walker Dunlop
GLAXOSMITHKLINE PLC vs. Walker Dunlop
Seneca Foods vs. Walker Dunlop
ATT vs. Walker Dunlop
Liquidia Corp vs. Walker Dunlop
Solo Brands vs. Walker Dunlop
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Walker Dunlop as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Walker Dunlop's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Walker Dunlop's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Walker Dunlop.

DOW

Pair trading matchups for DOW

Novan vs. DOW
ATT vs. DOW
Solo Brands vs. DOW
GLAXOSMITHKLINE PLC vs. DOW
Visa vs. DOW
Alphabet vs. DOW
Vmware vs. DOW
Arca Biopharma vs. DOW
Context Therapeutics vs. DOW
BP PLC vs. DOW
Alzamend Neuro vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Pair Trading with Walker Dunlop and DOW

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

Walker Dunlop

Pair trading matchups for Walker Dunlop

Cyclacel Pharmaceuti vs. Walker Dunlop
Liquidia Corp vs. Walker Dunlop
Calyxt vs. Walker Dunlop
MITIE GROUP vs. Walker Dunlop
BP PLC vs. Walker Dunlop
Alphabet vs. Walker Dunlop
Vmware vs. Walker Dunlop
International Business vs. Walker Dunlop
Alzamend Neuro vs. Walker Dunlop
GLAXOSMITHKLINE PLC vs. Walker Dunlop
Solo Brands vs. Walker Dunlop
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Walker Dunlop as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Walker Dunlop's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Walker Dunlop's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Walker Dunlop.
The idea behind Walker Dunlop and DOW 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.

DOW

Pair trading matchups for DOW

Cyclacel Pharmaceuti vs. DOW
Visa vs. DOW
MITIE GROUP vs. DOW
Liquidia Corp vs. DOW
ATT vs. DOW
Solo Brands vs. DOW
Alzamend Neuro vs. DOW
Arca Biopharma vs. DOW
Novan vs. DOW
International Business vs. DOW
Context Therapeutics vs. DOW
Alphabet vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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