Correlation Between Associated Capital and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Diamond Hill 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 Associated Capital and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Diamond Hill Investment, you can compare the effects of market volatilities on Associated Capital and Diamond Hill 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 Associated Capital with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Diamond Hill.
Diversification Opportunities for Associated Capital and Diamond Hill
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Diamond is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Associated Capital 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 Associated Capital Group are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Associated Capital i.e., Associated Capital and Diamond Hill go up and down completely randomly.
Pair Corralation between Associated Capital and Diamond Hill
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 1.09 times more return on investment than Diamond Hill. However, Associated Capital is 1.09 times more volatile than Diamond Hill Investment. It trades about 0.13 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.15 per unit of risk. If you would invest 3,532 in Associated Capital Group on November 5, 2024 and sell it today you would earn a total of 125.00 from holding Associated Capital Group or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Diamond Hill Investment
Performance |
| Timeline |
| Associated Capital |
| Diamond Hill Investment |
Associated Capital and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Diamond Hill
The main advantage of trading using opposite Associated Capital and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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