Correlation Between Walker Dunlop and Forrester Research

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

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

Diversification Opportunities for Walker Dunlop and Forrester Research

0.83

Correlation Coefficient

Walker Dunlop  Forrester Research

Very poor diversification

The 3 months correlation between Walker and Forrester is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Forrester Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forrester Research 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 Forrester Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forrester Research has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Forrester Research go up and down completely randomly.

Pair Corralation between Walker Dunlop and Forrester Research

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.84 times more return on investment than Forrester Research. However, Walker Dunlop is 1.19 times less risky than Forrester Research. It trades about 0.21 of its potential returns per unit of risk. Forrester Research is currently generating about 0.04 per unit of risk. If you would invest  10,277  in Walker Dunlop on June 23, 2024 and sell it today you would earn a total of  829.00  from holding Walker Dunlop or generate 8.07% return on investment over 90 days.

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

Walker Dunlop  vs.  Forrester Research

Walker Dunlop

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Walker Dunlop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Forrester Research

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forrester Research are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Forrester Research is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walker Dunlop and Forrester Research

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

The idea behind Walker Dunlop and Forrester Research 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.