Correlation Between Diamond Hill and ASA Gold
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and ASA Gold 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 ASA Gold 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 ASA Gold and, you can compare the effects of market volatilities on Diamond Hill and ASA Gold 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 ASA Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and ASA Gold.
Diversification Opportunities for Diamond Hill and ASA Gold
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diamond and ASA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and ASA Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA Gold 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 ASA Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA Gold has no effect on the direction of Diamond Hill i.e., Diamond Hill and ASA Gold go up and down completely randomly.
Pair Corralation between Diamond Hill and ASA Gold
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the ASA Gold. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Hill Investment is 1.11 times less risky than ASA Gold. The stock trades about -0.01 of its potential returns per unit of risk. The ASA Gold and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,618 in ASA Gold and on October 21, 2024 and sell it today you would earn a total of 563.00 from holding ASA Gold and or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. ASA Gold and
Performance |
| Timeline |
| Diamond Hill Investment |
| ASA Gold |
Diamond Hill and ASA Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and ASA Gold
The main advantage of trading using opposite Diamond Hill and ASA Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, ASA Gold 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 ASA Gold will offset losses from the drop in ASA Gold's long position.| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
| ASA Gold vs. AngloGold Ashanti plc | ASA Gold vs. Sprott Physical Gold | ASA Gold vs. Gold Fields Ltd | ASA Gold vs. Harmony Gold Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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