Correlation Between Walker Dunlop and IShares Currency

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

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

Diversification Opportunities for Walker Dunlop and IShares Currency

0.76

Correlation Coefficient

Walker Dunlop  IShares Currency

Poor diversification

The 3 months correlation between Walker and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and IShares Currency go up and down completely randomly.

Pair Corralation between Walker Dunlop and IShares Currency

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.29 times more return on investment than IShares Currency. However, Walker Dunlop is 2.29 times more volatile than iShares Currency Hedged. It trades about 0.05 of its potential returns per unit of risk. iShares Currency Hedged is currently generating about 0.0 per unit of risk. If you would invest  10,641  in Walker Dunlop on August 30, 2024 and sell it today you would earn a total of  441.00  from holding Walker Dunlop or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Walker Dunlop  vs.  iShares Currency Hedged

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.

iShares Currency Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Currency Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, IShares Currency is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and IShares Currency

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

The idea behind Walker Dunlop and iShares Currency Hedged 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.