Correlation Between Walker Dunlop and Lenovo

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

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

Diversification Opportunities for Walker Dunlop and Lenovo

0.15

Correlation Coefficient

Walker Dunlop  Lenovo

Average diversification

The 3 months correlation between Walker and Lenovo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Lenovo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo 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 Lenovo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Lenovo go up and down completely randomly.

Pair Corralation between Walker Dunlop and Lenovo

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.73 times more return on investment than Lenovo. However, Walker Dunlop is 1.38 times less risky than Lenovo. It trades about -0.02 of its potential returns per unit of risk. Lenovo Group is currently generating about -0.14 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Lenovo Group

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.

Lenovo Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lenovo Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Walker Dunlop and Lenovo

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

The idea behind Walker Dunlop and Lenovo 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.