Correlation Between Walker Dunlop and Hercules Capital

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

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

Diversification Opportunities for Walker Dunlop and Hercules Capital

0.07

Correlation Coefficient

Walker Dunlop  Hercules Capital

Significant diversification

The 3 months correlation between Walker and Hercules is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital 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 Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Hercules Capital go up and down completely randomly.

Pair Corralation between Walker Dunlop and Hercules Capital

Assuming the 90 days horizon Walker Dunlop is expected to under-perform the Hercules Capital. In addition to that, Walker Dunlop is 1.26 times more volatile than Hercules Capital. It trades about -0.01 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.04 per unit of volatility. If you would invest  1,249  in Hercules Capital on April 20, 2025 and sell it today you would earn a total of  440.00  from holding Hercules Capital or generate 35.23% return on investment over 90 days.

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

Walker Dunlop  vs.  Hercules Capital

Walker Dunlop

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Walker Dunlop is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hercules Capital

Risk-Adjusted Performance

OK

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

Pair Trading with Walker Dunlop and Hercules Capital

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

The idea behind Walker Dunlop and Hercules Capital 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.