Correlation Between Walker Dunlop and Rocket CompaniesInc

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

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

Diversification Opportunities for Walker Dunlop and Rocket CompaniesInc

0.38

Correlation Coefficient

Walker Dunlop  Rocket CompaniesInc

Weak diversification

The 3 months correlation between Walker and Rocket is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Rocket CompaniesInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket CompaniesInc 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 Rocket CompaniesInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket CompaniesInc has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Rocket CompaniesInc go up and down completely randomly.

Pair Corralation between Walker Dunlop and Rocket CompaniesInc

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.48 times more return on investment than Rocket CompaniesInc. However, Walker Dunlop is 2.09 times less risky than Rocket CompaniesInc. It trades about 0.0 of its potential returns per unit of risk. Rocket CompaniesInc is currently generating about -0.09 per unit of risk. If you would invest  9,442  in Walker Dunlop on January 25, 2024 and sell it today you would lose (47.00) from holding Walker Dunlop or give up 0.5% of portfolio value over 90 days.

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

Walker Dunlop  vs.  Rocket CompaniesInc

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.

Rocket CompaniesInc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket CompaniesInc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Rocket CompaniesInc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Walker Dunlop and Rocket CompaniesInc

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

The idea behind Walker Dunlop and Rocket CompaniesInc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.