Correlation Between Walker Dunlop and ACV Auctions

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

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

Diversification Opportunities for Walker Dunlop and ACV Auctions

0.18

Correlation Coefficient

Walker Dunlop  ACV Auctions

Average diversification

The 3 months correlation between Walker and ACV is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and ACV Auctions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACV Auctions 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 ACV Auctions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACV Auctions has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and ACV Auctions go up and down completely randomly.

Pair Corralation between Walker Dunlop and ACV Auctions

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.0 times less return on investment than ACV Auctions. But when comparing it to its historical volatility, Walker Dunlop is 1.37 times less risky than ACV Auctions. It trades about 0.04 of its potential returns per unit of risk. ACV Auctions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,862  in ACV Auctions on August 19, 2024 and sell it today you would earn a total of  210.00  from holding ACV Auctions or generate 11.28% return on investment over 90 days.

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

Walker Dunlop  vs.  ACV Auctions

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ACV Auctions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ACV Auctions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, ACV Auctions may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Walker Dunlop and ACV Auctions

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

The idea behind Walker Dunlop and ACV Auctions 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.