Correlation Between Walker Dunlop and Federated Mid

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

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

Diversification Opportunities for Walker Dunlop and Federated Mid

0.66

Correlation Coefficient

Walker Dunlop  Federated Mid

Poor diversification

The 3 months correlation between Walker and Federated is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 Federated Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Federated Mid go up and down completely randomly.

Pair Corralation between Walker Dunlop and Federated Mid

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Federated Mid. In addition to that, Walker Dunlop is 1.05 times more volatile than Federated Mid Cap Index. It trades about -0.07 of its total potential returns per unit of risk. Federated Mid Cap Index is currently generating about 0.21 per unit of volatility. If you would invest  1,296  in Federated Mid Cap Index on February 6, 2025 and sell it today you would earn a total of  145.00  from holding Federated Mid Cap Index or generate 11.19% return on investment over 90 days.

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

Walker Dunlop  vs.  Federated Mid Cap Index

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 June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Federated Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Mid Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Walker Dunlop and Federated Mid

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

The idea behind Walker Dunlop and Federated Mid Cap Index 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.