Correlation Between Walker Dunlop and Themac Resources

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

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

Diversification Opportunities for Walker Dunlop and Themac Resources

0.09

Correlation Coefficient

Walker Dunlop  Themac Resources

Significant diversification

The 3 months correlation between Walker and Themac is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Themac Resources go up and down completely randomly.

Pair Corralation between Walker Dunlop and Themac Resources

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.34 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Walker Dunlop is 7.36 times less risky than Themac Resources. It trades about 0.07 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Themac Resources Group on August 31, 2024 and sell it today you would lose (0.50) from holding Themac Resources Group or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Walker Dunlop  vs.  Themac Resources Group

Walker Dunlop

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Themac Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Themac Resources

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

The idea behind Walker Dunlop and Themac Resources Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.