Correlation Between Diamond Hill and Alpha Star
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Alpha Star 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 Alpha Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and Alpha Star Acquisition, you can compare the effects of market volatilities on Diamond Hill and Alpha Star 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 Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Alpha Star.
Diversification Opportunities for Diamond Hill and Alpha Star
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Diamond and Alpha is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Alpha Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition 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 Investment are associated (or correlated) with Alpha Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of Diamond Hill i.e., Diamond Hill and Alpha Star go up and down completely randomly.
Pair Corralation between Diamond Hill and Alpha Star
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.07 times more return on investment than Alpha Star. However, Diamond Hill Investment is 13.51 times less risky than Alpha Star. It trades about -0.27 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about -0.08 per unit of risk. If you would invest 17,037 in Diamond Hill Investment on September 12, 2024 and sell it today you would lose (921.00) from holding Diamond Hill Investment or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 27.27% |
| Values | Daily Returns |
Diamond Hill Investment vs. Alpha Star Acquisition
Performance |
| Timeline |
| Diamond Hill Investment |
| Alpha Star Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Diamond Hill and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Alpha Star
The main advantage of trading using opposite Diamond Hill and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Alpha Star 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 Alpha Star will offset losses from the drop in Alpha Star's long position.| Diamond Hill vs. Stellus Capital Investment | Diamond Hill vs. Prospect Capital | Diamond Hill vs. Gladstone Capital | Diamond Hill vs. Main Street Capital |
| Alpha Star vs. HUMANA INC | Alpha Star vs. Barloworld Ltd ADR | Alpha Star vs. Morningstar Unconstrained Allocation | Alpha Star vs. Thrivent High Yield |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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