Correlation Between Diamond Hill and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Financial Industries 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 Diamond Hill and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Long Short and Financial Industries Fund, you can compare the effects of market volatilities on Diamond Hill and Financial Industries 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 Diamond Hill with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Financial Industries.
Diversification Opportunities for Diamond Hill and Financial Industries
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diamond and Financial is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Diamond Hill 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 Diamond Hill Long Short are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Diamond Hill i.e., Diamond Hill and Financial Industries go up and down completely randomly.
Pair Corralation between Diamond Hill and Financial Industries
Assuming the 90 days horizon Diamond Hill is expected to generate 1.29 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Diamond Hill Long Short is 1.84 times less risky than Financial Industries. It trades about 0.33 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,698 in Financial Industries Fund on April 22, 2025 and sell it today you would earn a total of 223.00 from holding Financial Industries Fund or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Long Short vs. Financial Industries Fund
Performance |
| Timeline |
| Diamond Hill Long |
| Financial Industries |
Diamond Hill and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Financial Industries
The main advantage of trading using opposite Diamond Hill and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Diamond Hill vs. Putnam Global Technology | Diamond Hill vs. Dreyfus Technology Growth | Diamond Hill vs. Icon Information Technology | Diamond Hill vs. Science Technology Fund |
| Financial Industries vs. Mid Cap Growth | Financial Industries vs. Upright Growth Income | Financial Industries vs. Qs Moderate Growth | Financial Industries vs. Pace Large Growth |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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