Correlation Between Walker Dunlop and MegaShort

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

By analyzing existing cross correlation between Walker Dunlop and MegaShort 20 Year, you can compare the effects of market volatilities on Walker Dunlop and MegaShort 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 MegaShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and MegaShort.

Diversification Opportunities for Walker Dunlop and MegaShort

-0.11

Correlation Coefficient

Walker Dunlop  MegaShort

Good diversification

The 3 months correlation between Walker and MegaShort is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and MegaShort 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort 20 Year 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 MegaShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort 20 Year has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and MegaShort go up and down completely randomly.

Pair Corralation between Walker Dunlop and MegaShort

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.02 times more return on investment than MegaShort. However, Walker Dunlop is 1.02 times more volatile than MegaShort 20 Year. It trades about 0.06 of its potential returns per unit of risk. MegaShort 20 Year is currently generating about -0.11 per unit of risk. If you would invest  7,505  in Walker Dunlop on August 3, 2025 and sell it today you would earn a total of  487.00  from holding Walker Dunlop or generate 6.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Walker Dunlop  vs.  MegaShort 20 Year

Walker Dunlop

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Walker Dunlop may actually be approaching a critical reversion point that can send shares even higher in December 2025.

MegaShort 20 Year

Risk-Adjusted Performance

Weakest

Over the last 90 days MegaShort 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in December 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Walker Dunlop and MegaShort

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

The idea behind Walker Dunlop and MegaShort 20 Year 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.