Correlation Between Diamond Hill and AlphaTime Acquisition
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and AlphaTime Acquisition 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 AlphaTime Acquisition 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 AlphaTime Acquisition Corp, you can compare the effects of market volatilities on Diamond Hill and AlphaTime Acquisition 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 AlphaTime Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and AlphaTime Acquisition.
Diversification Opportunities for Diamond Hill and AlphaTime Acquisition
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and AlphaTime is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime 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 AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Diamond Hill i.e., Diamond Hill and AlphaTime Acquisition go up and down completely randomly.
Pair Corralation between Diamond Hill and AlphaTime Acquisition
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.13 times more return on investment than AlphaTime Acquisition. However, Diamond Hill Investment is 7.51 times less risky than AlphaTime Acquisition. It trades about -0.18 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about -0.43 per unit of risk. If you would invest 16,768 in Diamond Hill Investment on September 13, 2024 and sell it today you would lose (607.00) from holding Diamond Hill Investment or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.73% |
| Values | Daily Returns |
Diamond Hill Investment vs. AlphaTime Acquisition Corp
Performance |
| Timeline |
| Diamond Hill Investment |
| AlphaTime Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Diamond Hill and AlphaTime Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and AlphaTime Acquisition
The main advantage of trading using opposite Diamond Hill and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, AlphaTime Acquisition 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 AlphaTime Acquisition will offset losses from the drop in AlphaTime Acquisition'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 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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