Correlation Between Walker Dunlop and POWR Lithium

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Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and POWR Lithium 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 POWR Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and POWR Lithium Corp, you can compare the effects of market volatilities on Walker Dunlop and POWR Lithium 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 POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and POWR Lithium.

Diversification Opportunities for Walker Dunlop and POWR Lithium

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Walker and POWR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium Corp 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 POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and POWR Lithium go up and down completely randomly.

Pair Corralation between Walker Dunlop and POWR Lithium

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the POWR Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 12.72 times less risky than POWR Lithium. The stock trades about -0.03 of its potential returns per unit of risk. The POWR Lithium Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5.60  in POWR Lithium Corp on September 6, 2024 and sell it today you would earn a total of  0.30  from holding POWR Lithium Corp or generate 5.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walker Dunlop  vs.  POWR Lithium Corp

 Performance 
       Timeline  
Walker Dunlop 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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.
POWR Lithium Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in POWR Lithium Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, POWR Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Walker Dunlop and POWR Lithium Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walker Dunlop and POWR Lithium

The main advantage of trading using opposite Walker Dunlop and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, POWR Lithium 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 POWR Lithium will offset losses from the drop in POWR Lithium's long position.
The idea behind Walker Dunlop and POWR Lithium Corp 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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