Correlation Between Walker Dunlop and AVE SA

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

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

Diversification Opportunities for Walker Dunlop and AVE SA

0.52

Correlation Coefficient

Walker Dunlop  AVE SA

Very weak diversification

The 3 months correlation between Walker and AVE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and AVE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVE SA 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 AVE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVE SA has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and AVE SA go up and down completely randomly.

Pair Corralation between Walker Dunlop and AVE SA

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.69 times less return on investment than AVE SA. But when comparing it to its historical volatility, Walker Dunlop is 1.5 times less risky than AVE SA. It trades about 0.04 of its potential returns per unit of risk. AVE SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  44.00  in AVE SA on September 5, 2024 and sell it today you would earn a total of  2.00  from holding AVE SA or generate 4.55% return on investment over 90 days.

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

Walker Dunlop  vs.  AVE SA

Walker Dunlop

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 2 (%) 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.

AVE SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AVE SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, AVE SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walker Dunlop and AVE SA

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

The idea behind Walker Dunlop and AVE SA 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.