Correlation Between Walker Dunlop and Tethys Petroleum

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

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

Diversification Opportunities for Walker Dunlop and Tethys Petroleum

-0.38

Correlation Coefficient

Walker Dunlop  Tethys Petroleum

Very good diversification

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

Pair Corralation between Walker Dunlop and Tethys Petroleum

If you would invest  8,336  in Walker Dunlop on January 24, 2024 and sell it today you would earn a total of  1,059  from holding Walker Dunlop or generate 12.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walker Dunlop  vs.  Tethys Petroleum Limited

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.

Tethys Petroleum

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Tethys Petroleum Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical indicators, Tethys Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Tethys Petroleum

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

The idea behind Walker Dunlop and Tethys Petroleum Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.