Correlation Between Walker Dunlop and Nationwide Small

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

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

Diversification Opportunities for Walker Dunlop and Nationwide Small

0.2

Correlation Coefficient

Walker Dunlop  Nationwide Small

Modest diversification

The 3 months correlation between Walker and Nationwide is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap 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 Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Nationwide Small go up and down completely randomly.

Pair Corralation between Walker Dunlop and Nationwide Small

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Nationwide Small. In addition to that, Walker Dunlop is 1.29 times more volatile than Nationwide Small Cap. It trades about -0.11 of its total potential returns per unit of risk. Nationwide Small Cap is currently generating about -0.05 per unit of volatility. If you would invest  1,336  in Nationwide Small Cap on September 11, 2024 and sell it today you would lose (14.00) from holding Nationwide Small Cap or give up 1.05% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Nationwide Small Cap

Walker Dunlop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) 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.

Nationwide Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Nationwide Small

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

The idea behind Walker Dunlop and Nationwide Small Cap 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.