Correlation Between Walker Dunlop and Moderna

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

Diversification Opportunities for Walker Dunlop and Moderna

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Walker and Moderna is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna 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 Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Moderna go up and down completely randomly.

Pair Corralation between Walker Dunlop and Moderna

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.5 times less return on investment than Moderna. But when comparing it to its historical volatility, Walker Dunlop is 1.97 times less risky than Moderna. It trades about 0.07 of its potential returns per unit of risk. Moderna is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,178  in Moderna on April 4, 2022 and sell it today you would earn a total of  7,817  from holding Moderna or generate 108.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  Moderna

 Performance (%) 
      Timeline 
Walker Dunlop 
Walker Performance
0 of 100
Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0245
Payout Ratio
0.26
Forward Annual Dividend Rate
2.4
Dividend Date
2022-06-03
Ex Dividend Date
2022-05-18

Walker Price Channel

Moderna 
Moderna Performance
0 of 100
Over the last 90 days Moderna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Moderna Price Channel

Walker Dunlop and Moderna Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Walker Dunlop and Moderna

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

Walker Dunlop

Pair trading matchups for Walker Dunlop

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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 Moderna 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.

Moderna

Pair trading matchups for Moderna

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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