Correlation Between Walker Dunlop and Colgate Palmolive

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

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

Diversification Opportunities for Walker Dunlop and Colgate Palmolive

0.17

Correlation Coefficient

Walker Dunlop  Colgate Palmolive

Average diversification

The 3 months correlation between Walker and Colgate is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Colgate Palmolive go up and down completely randomly.

Pair Corralation between Walker Dunlop and Colgate Palmolive

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.94 times more return on investment than Colgate Palmolive. However, Walker Dunlop is 1.94 times more volatile than Colgate Palmolive. It trades about 0.02 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.11 per unit of risk. If you would invest  7,140  in Walker Dunlop on April 21, 2025 and sell it today you would earn a total of  66.00  from holding Walker Dunlop or generate 0.92% 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.  Colgate Palmolive

Walker Dunlop

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 1 (%) 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.

Colgate Palmolive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Walker Dunlop and Colgate Palmolive

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

The idea behind Walker Dunlop and Colgate Palmolive 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.