Correlation Between Diamond Hill and Cannae Holdings
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings, you can compare the effects of market volatilities on Diamond Hill and Cannae Holdings 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 Cannae Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Cannae Holdings.
Diversification Opportunities for Diamond Hill and Cannae Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Cannae is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of Diamond Hill i.e., Diamond Hill and Cannae Holdings go up and down completely randomly.
Pair Corralation between Diamond Hill and Cannae Holdings
Given the investment horizon of 90 days Diamond Hill is expected to generate 1.24 times less return on investment than Cannae Holdings. In addition to that, Diamond Hill is 1.16 times more volatile than Cannae Holdings. It trades about 0.21 of its total potential returns per unit of risk. Cannae Holdings is currently generating about 0.3 per unit of volatility. If you would invest 1,947 in Cannae Holdings on August 28, 2024 and sell it today you would earn a total of 224.00 from holding Cannae Holdings or generate 11.5% 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. Cannae Holdings
Performance |
| Timeline |
| Diamond Hill Investment |
| Cannae Holdings |
Diamond Hill and Cannae Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Cannae Holdings
The main advantage of trading using opposite Diamond Hill and Cannae Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Cannae Holdings 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 Cannae Holdings will offset losses from the drop in Cannae Holdings' 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 |
| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. ConnectOne Bancorp | Cannae Holdings vs. Aquagold International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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