Correlation Between Diamond Hill and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Bread Financial 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 Bread Financial 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 Bread Financial Holdings, you can compare the effects of market volatilities on Diamond Hill and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Bread Financial.
Diversification Opportunities for Diamond Hill and Bread Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Bread is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Diamond Hill i.e., Diamond Hill and Bread Financial go up and down completely randomly.
Pair Corralation between Diamond Hill and Bread Financial
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.46 times more return on investment than Bread Financial. However, Diamond Hill Investment is 2.19 times less risky than Bread Financial. It trades about 0.07 of its potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.02 per unit of risk. If you would invest 15,522 in Diamond Hill Investment on August 31, 2024 and sell it today you would earn a total of 1,105 from holding Diamond Hill Investment or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Bread Financial Holdings
Performance |
| Timeline |
| Diamond Hill Investment |
| Bread Financial Holdings |
Diamond Hill and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Bread Financial
The main advantage of trading using opposite Diamond Hill and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial'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 |
| Bread Financial vs. SLM Corp | Bread Financial vs. Orix Corp Ads | Bread Financial vs. FirstCash | Bread Financial vs. Medallion Financial Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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