Correlation Between Walker Dunlop and CNO Financial

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

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

Diversification Opportunities for Walker Dunlop and CNO Financial

0.67

Correlation Coefficient

Walker Dunlop  CNO Financial

Poor diversification

The 3 months correlation between Walker and CNO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group 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 CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and CNO Financial go up and down completely randomly.

Pair Corralation between Walker Dunlop and CNO Financial

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the CNO Financial. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.07 times less risky than CNO Financial. The stock trades about -0.01 of its potential returns per unit of risk. The CNO Financial Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,693  in CNO Financial Group on February 3, 2024 and sell it today you would earn a total of  24.00  from holding CNO Financial Group or generate 0.89% return on investment over 90 days.

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

Walker Dunlop  vs.  CNO Financial Group

Walker Dunlop

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 2 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

CNO Financial Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CNO Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and CNO Financial

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

The idea behind Walker Dunlop and CNO Financial Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.