Correlation Between Walker Dunlop and Kennedy Wilson

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

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

Diversification Opportunities for Walker Dunlop and Kennedy Wilson

0.28

Correlation Coefficient

Walker Dunlop  Kennedy Wilson

Modest diversification

The 3 months correlation between Walker and Kennedy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Kennedy Wilson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Wilson Holdings 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 Kennedy Wilson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Wilson Holdings has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Kennedy Wilson go up and down completely randomly.

Pair Corralation between Walker Dunlop and Kennedy Wilson

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.04 times more return on investment than Kennedy Wilson. However, Walker Dunlop is 1.04 times more volatile than Kennedy Wilson Holdings. It trades about 0.09 of its potential returns per unit of risk. Kennedy Wilson Holdings is currently generating about -0.07 per unit of risk. If you would invest  6,091  in Walker Dunlop on February 3, 2024 and sell it today you would earn a total of  3,332  from holding Walker Dunlop or generate 54.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Walker Dunlop  vs.  Kennedy Wilson Holdings

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.

Kennedy Wilson Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Wilson Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kennedy Wilson is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walker Dunlop and Kennedy Wilson

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

The idea behind Walker Dunlop and Kennedy Wilson Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.