Correlation Between Walker Dunlop and Epwin Group

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

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

Diversification Opportunities for Walker Dunlop and Epwin Group

0.52

Correlation Coefficient

Walker Dunlop  Epwin Group

Very weak diversification

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

Pair Corralation between Walker Dunlop and Epwin Group

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.93 times less return on investment than Epwin Group. In addition to that, Walker Dunlop is 1.14 times more volatile than Epwin Group PLC. It trades about 0.05 of its total potential returns per unit of risk. Epwin Group PLC is currently generating about 0.16 per unit of volatility. If you would invest  9,304  in Epwin Group PLC on September 4, 2024 and sell it today you would earn a total of  1,396  from holding Epwin Group PLC or generate 15.0% 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.  Epwin Group PLC

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.

Epwin Group PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Epwin Group PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Epwin Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Epwin Group

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

The idea behind Walker Dunlop and Epwin Group PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.