Correlation Between Walker Dunlop and Nuveen Santa

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

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

Diversification Opportunities for Walker Dunlop and Nuveen Santa

  Correlation Coefficient
Walker Dunlop
Nuveen Santa Barbara

Good diversification

The 3 months correlation between Walker and Nuveen is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Nuveen Santa Barbara in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Santa Barbara 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 Nuveen Santa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Santa Barbara has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Nuveen Santa go up and down completely randomly.

Pair Corralation between Walker Dunlop and Nuveen Santa

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.48 times more return on investment than Nuveen Santa. However, Walker Dunlop is 2.48 times more volatile than Nuveen Santa Barbara. It trades about 0.06 of its potential returns per unit of risk. Nuveen Santa Barbara is currently generating about 0.04 per unit of risk. If you would invest  6,039  in Walker Dunlop on July 25, 2021 and sell it today you would earn a total of  6,620  from holding Walker Dunlop or generate 109.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Walker Dunlop  vs.  Nuveen Santa Barbara

 Performance (%) 
Walker Dunlop 
 Walker Performance
0 of 100
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 weak fundamental indicators, Walker Dunlop exhibited solid returns over the last few months and may actually be approaching a breakup point.
Nuveen Santa Barbara 
 Nuveen Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Santa Barbara are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Santa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walker Dunlop and Nuveen Santa Volatility Contrast

 Predicted Return Density 

Pair Trading with Walker Dunlop and Nuveen Santa

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

Walker Dunlop

Pair trading matchups for Walker Dunlop

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Walker Dunlop as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Walker Dunlop's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Walker Dunlop's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Walker Dunlop.
The idea behind Walker Dunlop and Nuveen Santa Barbara 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.
Check out your portfolio center. 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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