Correlation Between Walker Dunlop and Virtus Kar

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

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

Diversification Opportunities for Walker Dunlop and Virtus Kar

0.31

Correlation Coefficient

Walker Dunlop  Virtus Kar

Weak diversification

The 3 months correlation between Walker and Virtus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Virtus Kar go up and down completely randomly.

Pair Corralation between Walker Dunlop and Virtus Kar

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Virtus Kar. In addition to that, Walker Dunlop is 1.16 times more volatile than Virtus Kar Small Cap. It trades about -0.14 of its total potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.11 per unit of volatility. If you would invest  3,861  in Virtus Kar Small Cap on September 7, 2024 and sell it today you would earn a total of  97.00  from holding Virtus Kar Small Cap or generate 2.51% return on investment over 90 days.

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

Walker Dunlop  vs.  Virtus Kar 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.

Virtus Kar Small

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Virtus Kar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Virtus Kar

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

The idea behind Walker Dunlop and Virtus Kar 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.