Correlation Between Walker Dunlop and Salient Alternative

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

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

Diversification Opportunities for Walker Dunlop and Salient Alternative

0.86

Correlation Coefficient

Walker Dunlop  Salient Alternative

Very poor diversification

The 3 months correlation between Walker and Salient is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Salient Alternative go up and down completely randomly.

Pair Corralation between Walker Dunlop and Salient Alternative

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 2.62 times more return on investment than Salient Alternative. However, Walker Dunlop is 2.62 times more volatile than Salient Alternative Beta. It trades about 0.1 of its potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.2 per unit of risk. If you would invest  10,204  in Walker Dunlop on August 13, 2024 and sell it today you would earn a total of  989.00  from holding Walker Dunlop or generate 9.69% 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.  Salient Alternative Beta

Walker Dunlop

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Salient Alternative Beta

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Alternative Beta are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Salient Alternative may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Walker Dunlop and Salient Alternative

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

The idea behind Walker Dunlop and Salient Alternative Beta 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.