Correlation Between Walker Dunlop and DNB Financial

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

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

Diversification Opportunities for Walker Dunlop and DNB Financial

0.0

Correlation Coefficient

Walker Dunlop  DNB Financial

Pay attention - limited upside

The 3 months correlation between Walker and DNB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and DNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB Financial 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 DNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB Financial has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and DNB Financial go up and down completely randomly.

Pair Corralation between Walker Dunlop and DNB Financial

If you would invest (100.00) in DNB Financial on February 3, 2024 and sell it today you would earn a total of  100.00  from holding DNB Financial or generate -100.0% return on investment over 90 days.

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

Walker Dunlop  vs.  DNB Financial

Walker Dunlop

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

DNB Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DNB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walker Dunlop and DNB Financial

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

The idea behind Walker Dunlop and DNB Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.