Correlation Between Walker Dunlop and Invesco FTSE

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

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

Diversification Opportunities for Walker Dunlop and Invesco FTSE

0.18

Correlation Coefficient

Walker Dunlop  Invesco FTSE

Average diversification

The 3 months correlation between Walker and Invesco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Invesco FTSE go up and down completely randomly.

Pair Corralation between Walker Dunlop and Invesco FTSE

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.06 times more return on investment than Invesco FTSE. However, Walker Dunlop is 2.06 times more volatile than Invesco FTSE RAFI. It trades about -0.03 of its potential returns per unit of risk. Invesco FTSE RAFI is currently generating about -0.16 per unit of risk. If you would invest  9,545  in Walker Dunlop on February 2, 2024 and sell it today you would lose (122.00) from holding Walker Dunlop or give up 1.28% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Invesco FTSE RAFI

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Invesco FTSE RAFI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco FTSE RAFI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Invesco FTSE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walker Dunlop and Invesco FTSE

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

The idea behind Walker Dunlop and Invesco FTSE RAFI 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.