Correlation Between Walker Dunlop and BankUnited

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

Diversification Opportunities for Walker Dunlop and BankUnited

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Walker and BankUnited is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and BankUnited go up and down completely randomly.

Pair Corralation between Walker Dunlop and BankUnited

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.08 times more return on investment than BankUnited. However, Walker Dunlop is 1.08 times more volatile than BankUnited. It trades about 0.41 of its potential returns per unit of risk. BankUnited is currently generating about 0.4 per unit of risk. If you would invest  9,844  in Walker Dunlop on May 17, 2022 and sell it today you would earn a total of  1,594  from holding Walker Dunlop or generate 16.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  BankUnited

 Performance (%) 
       Timeline  
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 unfluctuating fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Walker Price Channel

BankUnited 
BankUnited Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, BankUnited is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BankUnited Price Channel

Walker Dunlop and BankUnited Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and BankUnited

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

Walker Dunlop

Pair trading matchups for Walker Dunlop

The idea behind Walker Dunlop and BankUnited 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.
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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