Correlation Between Diamond Hill and GP Act
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and GP Act 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 GP Act 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 GP Act III Acquisition, you can compare the effects of market volatilities on Diamond Hill and GP Act 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 GP Act. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and GP Act.
Diversification Opportunities for Diamond Hill and GP Act
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamond and GPAT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and GP Act III Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Act III 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 GP Act. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Act III has no effect on the direction of Diamond Hill i.e., Diamond Hill and GP Act go up and down completely randomly.
Pair Corralation between Diamond Hill and GP Act
Given the investment horizon of 90 days Diamond Hill is expected to generate 3.1 times less return on investment than GP Act. In addition to that, Diamond Hill is 13.3 times more volatile than GP Act III Acquisition. It trades about 0.0 of its total potential returns per unit of risk. GP Act III Acquisition is currently generating about 0.11 per unit of volatility. If you would invest 999.00 in GP Act III Acquisition on September 14, 2024 and sell it today you would earn a total of 15.00 from holding GP Act III Acquisition or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.28% |
| Values | Daily Returns |
Diamond Hill Investment vs. GP Act III Acquisition
Performance |
| Timeline |
| Diamond Hill Investment |
| GP Act III |
Diamond Hill and GP Act Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and GP Act
The main advantage of trading using opposite Diamond Hill and GP Act positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, GP Act 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 GP Act will offset losses from the drop in GP Act'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 |
| GP Act vs. HF Sinclair Corp | GP Act vs. Finnair Oyj | GP Act vs. United States Steel | GP Act vs. AerSale 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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