Correlation Between Walker Dunlop and Disney

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

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

Diversification Opportunities for Walker Dunlop and Disney

-0.25

Correlation Coefficient

Walker Dunlop  Disney

Very good diversification

The 3 months correlation between Walker and Disney is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Disney go up and down completely randomly.

Pair Corralation between Walker Dunlop and Disney

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.68 times more return on investment than Disney. However, Walker Dunlop is 1.68 times more volatile than Walt Disney. It trades about -0.02 of its potential returns per unit of risk. Walt Disney is currently generating about -0.19 per unit of risk. If you would invest  9,520  in Walker Dunlop on January 26, 2024 and sell it today you would lose (116.00) from holding Walker Dunlop or give up 1.22% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Walt Disney

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.

Walt Disney

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Disney

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

The idea behind Walker Dunlop and Walt Disney 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.