Correlation Between Walker Dunlop and Formula Systems

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

By analyzing existing cross correlation between Walker Dunlop and Formula Systems 1985, you can compare the effects of market volatilities on Walker Dunlop and Formula Systems 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 Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Formula Systems.

Diversification Opportunities for Walker Dunlop and Formula Systems

-0.25

Correlation Coefficient

Walker Dunlop  Formula Systems

Very good diversification

The 3 months correlation between Walker and Formula is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 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 Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Formula Systems go up and down completely randomly.

Pair Corralation between Walker Dunlop and Formula Systems

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.96 times more return on investment than Formula Systems. However, Walker Dunlop is 1.04 times less risky than Formula Systems. It trades about -0.04 of its potential returns per unit of risk. Formula Systems 1985 is currently generating about -0.21 per unit of risk. If you would invest  9,442  in Walker Dunlop on January 24, 2024 and sell it today you would lose (210.00) from holding Walker Dunlop or give up 2.22% 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.  Formula Systems 1985

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.

Formula Systems 1985

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Formula Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Formula Systems

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

The idea behind Walker Dunlop and Formula Systems 1985 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.