Correlation Between Diamond Hill and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Federated Short-term 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 Federated Short-term 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 Federated Short Term Income, you can compare the effects of market volatilities on Diamond Hill and Federated Short-term 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 Federated Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Federated Short-term.
Diversification Opportunities for Diamond Hill and Federated Short-term
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DIAMOND and FEDERATED is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term 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 Federated Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Diamond Hill i.e., Diamond Hill and Federated Short-term go up and down completely randomly.
Pair Corralation between Diamond Hill and Federated Short-term
Assuming the 90 days horizon Diamond Hill Long Short is expected to generate 4.2 times more return on investment than Federated Short-term. However, Diamond Hill is 4.2 times more volatile than Federated Short Term Income. It trades about 0.18 of its potential returns per unit of risk. Federated Short Term Income is currently generating about 0.21 per unit of risk. If you would invest 3,134 in Diamond Hill Long Short on September 4, 2025 and sell it today you would earn a total of 49.00 from holding Diamond Hill Long Short or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Diamond Hill Long Short vs. Federated Short Term Income
Performance |
| Timeline |
| Diamond Hill Long |
| Federated Short Term |
Diamond Hill and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Federated Short-term
The main advantage of trading using opposite Diamond Hill and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Federated Short-term 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 Federated Short-term will offset losses from the drop in Federated Short-term's long position.| Diamond Hill vs. American Century Etf | Diamond Hill vs. Qs Large Cap | Diamond Hill vs. Fidelity Large Cap | Diamond Hill vs. Nuveen Large Cap |
| Federated Short-term vs. T Rowe Price | Federated Short-term vs. Hood River New | Federated Short-term vs. Franklin Lifesmart 2045 | Federated Short-term vs. T Rowe Price |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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