Correlation Between Timbercreek Financial and Walker Dunlop

Can any of the company-specific risk be diversified away by investing in both Timbercreek Financial 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 Timbercreek Financial and Walker Dunlop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Timbercreek Financial Corp and Walker Dunlop, you can compare the effects of market volatilities on Timbercreek Financial 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 Timbercreek Financial with a short position of Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and Walker Dunlop.

Diversification Opportunities for Timbercreek Financial and Walker Dunlop

0.39

Correlation Coefficient

Timbercreek Financial  Walker Dunlop

Weak diversification

The 3 months correlation between Timbercreek and Walker is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Timbercreek Financial 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 Timbercreek Financial Corp 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 Timbercreek Financial i.e., Timbercreek Financial and Walker Dunlop go up and down completely randomly.

Pair Corralation between Timbercreek Financial and Walker Dunlop

Assuming the 90 days horizon Timbercreek Financial Corp is expected to under-perform the Walker Dunlop. In addition to that, Timbercreek Financial is 1.57 times more volatile than Walker Dunlop. It trades about -0.06 of its total potential returns per unit of risk. Walker Dunlop is currently generating about 0.0 per unit of volatility. If you would invest  10,790  in Walker Dunlop on September 13, 2024 and sell it today you would lose (48.00) from holding Walker Dunlop or give up 0.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Timbercreek Financial Corp  vs.  Walker Dunlop

Timbercreek Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Timbercreek Financial and Walker Dunlop

The main advantage of trading using opposite Timbercreek Financial and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timbercreek Financial 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 Timbercreek Financial Corp 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.

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 the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .