Correlation Between Walker Dunlop and Mr Cooper

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

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

Diversification Opportunities for Walker Dunlop and Mr Cooper

-0.12

Correlation Coefficient

Walker Dunlop  Mr Cooper

Good diversification

The 3 months correlation between Walker and COOP is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group 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 Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Mr Cooper go up and down completely randomly.

Pair Corralation between Walker Dunlop and Mr Cooper

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Mr Cooper. In addition to that, Walker Dunlop is 1.06 times more volatile than Mr Cooper Group. It trades about -0.2 of its total potential returns per unit of risk. Mr Cooper Group is currently generating about 0.03 per unit of volatility. If you would invest  7,674  in Mr Cooper Group on February 1, 2024 and sell it today you would earn a total of  46.00  from holding Mr Cooper Group or generate 0.6% return on investment over 90 days.

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

Walker Dunlop  vs.  Mr Cooper Group

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.

Mr Cooper Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Mr Cooper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Mr Cooper

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

The idea behind Walker Dunlop and Mr Cooper Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.