Correlation Between Walker Dunlop and Precision Drilling

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

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

Diversification Opportunities for Walker Dunlop and Precision Drilling

0.71

Correlation Coefficient

Walker Dunlop  Precision Drilling

Poor diversification

The 3 months correlation between Walker and Precision is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Precision Drilling go up and down completely randomly.

Pair Corralation between Walker Dunlop and Precision Drilling

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.05 times less return on investment than Precision Drilling. But when comparing it to its historical volatility, Walker Dunlop is 1.12 times less risky than Precision Drilling. It trades about 0.21 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,683  in Precision Drilling on May 22, 2025 and sell it today you would earn a total of  1,716  from holding Precision Drilling or generate 30.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Walker Dunlop  vs.  Precision Drilling

Walker Dunlop

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 16 (%) 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.

Precision Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Precision Drilling displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Precision Drilling

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

The idea behind Walker Dunlop and Precision Drilling 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 CEOs Directory module to screen CEOs from public companies around the world.