Correlation Between Walker Dunlop and Pimco Preferred

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

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

Diversification Opportunities for Walker Dunlop and Pimco Preferred

-0.17

Correlation Coefficient

Walker Dunlop  Pimco Preferred

Good diversification

The 3 months correlation between Walker and Pimco is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And 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 Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Pimco Preferred go up and down completely randomly.

Pair Corralation between Walker Dunlop and Pimco Preferred

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 10.63 times more return on investment than Pimco Preferred. However, Walker Dunlop is 10.63 times more volatile than Pimco Preferred And. It trades about -0.02 of its potential returns per unit of risk. Pimco Preferred And is currently generating about -0.28 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walker Dunlop  vs.  Pimco Preferred And

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.

Pimco Preferred And

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Preferred And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walker Dunlop and Pimco Preferred

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

The idea behind Walker Dunlop and Pimco Preferred And 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.