Correlation Between Walker Dunlop and Abercrombie Fitch

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

By analyzing existing cross correlation between Walker Dunlop and Abercrombie Fitch, you can compare the effects of market volatilities on Walker Dunlop and Abercrombie Fitch 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 Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Abercrombie Fitch.

Diversification Opportunities for Walker Dunlop and Abercrombie Fitch

0.36

Correlation Coefficient

Walker Dunlop  Abercrombie Fitch

Weak diversification

The 3 months correlation between Walker and Abercrombie is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch 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 Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Abercrombie Fitch go up and down completely randomly.

Pair Corralation between Walker Dunlop and Abercrombie Fitch

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Abercrombie Fitch. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.88 times less risky than Abercrombie Fitch. The stock trades about 0.0 of its potential returns per unit of risk. The Abercrombie Fitch is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  13,847  in Abercrombie Fitch on August 30, 2024 and sell it today you would earn a total of  1,009  from holding Abercrombie Fitch or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Abercrombie Fitch

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Abercrombie Fitch

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Abercrombie Fitch are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Abercrombie Fitch is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walker Dunlop and Abercrombie Fitch

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

The idea behind Walker Dunlop and Abercrombie Fitch 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.