Correlation Between Diamond Hill and Beneficient Warrant
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Beneficient Warrant 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 Beneficient Warrant 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 Beneficient Warrant, you can compare the effects of market volatilities on Diamond Hill and Beneficient Warrant 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 Beneficient Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Beneficient Warrant.
Diversification Opportunities for Diamond Hill and Beneficient Warrant
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Beneficient is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Beneficient Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beneficient Warrant 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 Beneficient Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beneficient Warrant has no effect on the direction of Diamond Hill i.e., Diamond Hill and Beneficient Warrant go up and down completely randomly.
Pair Corralation between Diamond Hill and Beneficient Warrant
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Beneficient Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Hill Investment is 13.57 times less risky than Beneficient Warrant. The stock trades about -0.22 of its potential returns per unit of risk. The Beneficient Warrant is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.69 in Beneficient Warrant on September 14, 2024 and sell it today you would earn a total of 0.20 from holding Beneficient Warrant or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Beneficient Warrant
Performance |
| Timeline |
| Diamond Hill Investment |
| Beneficient Warrant |
Diamond Hill and Beneficient Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Beneficient Warrant
The main advantage of trading using opposite Diamond Hill and Beneficient Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Beneficient Warrant 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 Beneficient Warrant will offset losses from the drop in Beneficient Warrant'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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