Correlation Between Walker Dunlop and First Trust

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

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

Diversification Opportunities for Walker Dunlop and First Trust

0.9

Correlation Coefficient

Walker Dunlop  First Trust

Almost no diversification

The 3 months correlation between Walker and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Managed has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and First Trust go up and down completely randomly.

Pair Corralation between Walker Dunlop and First Trust

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 3.56 times more return on investment than First Trust. However, Walker Dunlop is 3.56 times more volatile than First Trust Managed. It trades about 0.14 of its potential returns per unit of risk. First Trust Managed is currently generating about 0.22 per unit of risk. If you would invest  7,154  in Walker Dunlop on July 4, 2025 and sell it today you would earn a total of  1,299  from holding Walker Dunlop or generate 18.16% return on investment over 90 days.

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

Walker Dunlop  vs.  First Trust Managed

Walker Dunlop

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Walker Dunlop exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Trust Managed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Managed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Walker Dunlop and First Trust

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

The idea behind Walker Dunlop and First Trust Managed 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.