Correlation Between Walker Dunlop and Refinaria

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

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

Diversification Opportunities for Walker Dunlop and Refinaria

0.78

Correlation Coefficient

Walker Dunlop  Refinaria

Poor diversification

The 3 months correlation between Walker and Refinaria is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos 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 Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Refinaria go up and down completely randomly.

Pair Corralation between Walker Dunlop and Refinaria

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.97 times less return on investment than Refinaria. But when comparing it to its historical volatility, Walker Dunlop is 1.64 times less risky than Refinaria. It trades about 0.11 of its potential returns per unit of risk. Refinaria de Petrleos is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  273.00  in Refinaria de Petrleos on June 24, 2024 and sell it today you would earn a total of  19.00  from holding Refinaria de Petrleos or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Walker Dunlop  vs.  Refinaria de Petrleos

Walker Dunlop

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Walker Dunlop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Refinaria de Petrleos

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Refinaria de Petrleos are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Refinaria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Refinaria

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

The idea behind Walker Dunlop and Refinaria de Petrleos 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.