Correlation Between Walker Dunlop and SPDR Gold

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

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

Diversification Opportunities for Walker Dunlop and SPDR Gold

0.36

Correlation Coefficient

Walker Dunlop  SPDR Gold

Weak diversification

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

Pair Corralation between Walker Dunlop and SPDR Gold

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.01 times less return on investment than SPDR Gold. In addition to that, Walker Dunlop is 1.68 times more volatile than SPDR Gold Shares. It trades about 0.04 of its total potential returns per unit of risk. SPDR Gold Shares is currently generating about 0.2 per unit of volatility. If you would invest  20,726  in SPDR Gold Shares on September 4, 2024 and sell it today you would earn a total of  2,433  from holding SPDR Gold Shares or generate 11.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Walker Dunlop  vs.  SPDR Gold Shares

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.

SPDR Gold Shares

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SPDR Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walker Dunlop and SPDR Gold

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

The idea behind Walker Dunlop and SPDR Gold Shares 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..