Correlation Between Microsoft and Walker Dunlop

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

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

Diversification Opportunities for Microsoft and Walker Dunlop

-0.68

Correlation Coefficient

Microsoft  Walker Dunlop

Excellent diversification

The 3 months correlation between Microsoft and Walker is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Microsoft 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 Microsoft are associated (or correlated) with Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of Microsoft i.e., Microsoft and Walker Dunlop go up and down completely randomly.

Pair Corralation between Microsoft and Walker Dunlop

Given the investment horizon of 90 days Microsoft is expected to generate 0.83 times more return on investment than Walker Dunlop. However, Microsoft is 1.21 times less risky than Walker Dunlop. It trades about 0.17 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.12 per unit of risk. If you would invest  39,444  in Microsoft on March 25, 2025 and sell it today you would earn a total of  9,134  from holding Microsoft or generate 23.16% return on investment over 90 days.

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

Microsoft  vs.  Walker Dunlop

Microsoft

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walker Dunlop

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microsoft and Walker Dunlop

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

The idea behind Microsoft and Walker Dunlop 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 Stocks Directory module to find actively traded stocks across global markets.