Correlation Between Walker Dunlop and Nio

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

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

Diversification Opportunities for Walker Dunlop and Nio

0.15

Correlation Coefficient

Walker Dunlop  Nio

Average diversification

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

Pair Corralation between Walker Dunlop and Nio

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.75 times more return on investment than Nio. However, Walker Dunlop is 1.33 times less risky than Nio. It trades about 0.03 of its potential returns per unit of risk. Nio Class A is currently generating about -0.45 per unit of risk. If you would invest  8,904  in Walker Dunlop on January 16, 2024 and sell it today you would earn a total of  85.00  from holding Walker Dunlop or generate 0.95% return on investment over 90 days.

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

Walker Dunlop  vs.  Nio Class A

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Walker Dunlop and Nio

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

The idea behind Walker Dunlop and Nio Class A 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..