Correlation Between Walker Dunlop and Embecta Corp

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

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

Diversification Opportunities for Walker Dunlop and Embecta Corp

0.41

Correlation Coefficient

Walker Dunlop  Embecta Corp

Very weak diversification

The 3 months correlation between Walker and Embecta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp 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 Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Embecta Corp go up and down completely randomly.

Pair Corralation between Walker Dunlop and Embecta Corp

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.52 times more return on investment than Embecta Corp. However, Walker Dunlop is 1.94 times less risky than Embecta Corp. It trades about 0.04 of its potential returns per unit of risk. Embecta Corp is currently generating about -0.03 per unit of risk. If you would invest  7,338  in Walker Dunlop on May 1, 2025 and sell it today you would earn a total of  302.00  from holding Walker Dunlop or generate 4.12% return on investment over 90 days.

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

Walker Dunlop  vs.  Embecta Corp

Walker Dunlop

Risk-Adjusted Performance

Weak

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Embecta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Walker Dunlop and Embecta Corp

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

The idea behind Walker Dunlop and Embecta Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.