Correlation Between Diamond Hill and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and GAMCO Natural 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 GAMCO Natural 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 GAMCO Natural Resources, you can compare the effects of market volatilities on Diamond Hill and GAMCO Natural 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 GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and GAMCO Natural.
Diversification Opportunities for Diamond Hill and GAMCO Natural
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and GAMCO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources 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 GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Diamond Hill i.e., Diamond Hill and GAMCO Natural go up and down completely randomly.
Pair Corralation between Diamond Hill and GAMCO Natural
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the GAMCO Natural. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Hill Investment is 1.01 times less risky than GAMCO Natural. The stock trades about -0.27 of its potential returns per unit of risk. The GAMCO Natural Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 573.00 in GAMCO Natural Resources on September 12, 2024 and sell it today you would earn a total of 17.00 from holding GAMCO Natural Resources or generate 2.97% 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. GAMCO Natural Resources
Performance |
| Timeline |
| Diamond Hill Investment |
| GAMCO Natural Resources |
Diamond Hill and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and GAMCO Natural
The main advantage of trading using opposite Diamond Hill and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, GAMCO Natural 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 GAMCO Natural will offset losses from the drop in GAMCO Natural's long position.| Diamond Hill vs. Stellus Capital Investment | Diamond Hill vs. Prospect Capital | Diamond Hill vs. Gladstone Capital | Diamond Hill vs. Main Street Capital |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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