Correlation Between Federal National and Walker Dunlop
Can any of the company-specific risk be diversified away by investing in both Federal National and Walker Dunlop 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 Federal National and Walker Dunlop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and Walker Dunlop, you can compare the effects of market volatilities on Federal National and Walker Dunlop 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 Federal National with a short position of Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Walker Dunlop.
Diversification Opportunities for Federal National and Walker Dunlop
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Walker is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Federal National 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 Federal National Mortgage are associated (or correlated) with Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of Federal National i.e., Federal National and Walker Dunlop go up and down completely randomly.
Pair Corralation between Federal National and Walker Dunlop
Assuming the 90 days horizon Federal National Mortgage is expected to generate 1.68 times more return on investment than Walker Dunlop. However, Federal National is 1.68 times more volatile than Walker Dunlop. It trades about 0.12 of its potential returns per unit of risk. Walker Dunlop is currently generating about 0.04 per unit of risk. If you would invest 290.00 in Federal National Mortgage on February 7, 2024 and sell it today you would earn a total of 323.00 from holding Federal National Mortgage or generate 111.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Walker Dunlop
Performance |
| Timeline |
| Federal National Mortgage |
| Walker Dunlop |
Federal National and Walker Dunlop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Walker Dunlop
The main advantage of trading using opposite Federal National and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Walker Dunlop 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 Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal National Mortgage |
| Walker Dunlop vs. Encore Capital Group | Walker Dunlop vs. Timbercreek Financial Corp | Walker Dunlop vs. Guild HoldingsCo |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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