Correlation Between Velocity Financial and Walker Dunlop

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

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

Diversification Opportunities for Velocity Financial and Walker Dunlop

0.78

Correlation Coefficient

Velocity Financial  Walker Dunlop

Poor diversification

The 3 months correlation between Velocity and Walker is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Velocity Financial Llc and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Velocity Financial 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 Velocity Financial Llc 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 Velocity Financial i.e., Velocity Financial and Walker Dunlop go up and down completely randomly.

Pair Corralation between Velocity Financial and Walker Dunlop

Considering the 90-day investment horizon Velocity Financial Llc is expected to generate 0.39 times more return on investment than Walker Dunlop. However, Velocity Financial Llc is 2.54 times less risky than Walker Dunlop. It trades about -0.12 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.07 per unit of risk. If you would invest  1,957  in Velocity Financial Llc on July 26, 2024 and sell it today you would lose (29.00) from holding Velocity Financial Llc or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Velocity Financial Llc  vs.  Walker Dunlop

Velocity Financial Llc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Velocity Financial Llc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Velocity Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Walker Dunlop

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Velocity Financial and Walker Dunlop

The main advantage of trading using opposite Velocity Financial and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velocity Financial 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 Velocity Financial Llc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.