Correlation Between Diamond Hill and Eagle Capital
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Eagle Capital 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 Eagle Capital 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 Eagle Capital Growth, you can compare the effects of market volatilities on Diamond Hill and Eagle Capital 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 Eagle Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Eagle Capital.
Diversification Opportunities for Diamond Hill and Eagle Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Eagle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Eagle Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Capital Growth 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 Eagle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Capital Growth has no effect on the direction of Diamond Hill i.e., Diamond Hill and Eagle Capital go up and down completely randomly.
Pair Corralation between Diamond Hill and Eagle Capital
Given the investment horizon of 90 days Diamond Hill is expected to generate 1.8 times less return on investment than Eagle Capital. In addition to that, Diamond Hill is 1.27 times more volatile than Eagle Capital Growth. It trades about 0.04 of its total potential returns per unit of risk. Eagle Capital Growth is currently generating about 0.09 per unit of volatility. If you would invest 789.00 in Eagle Capital Growth on August 24, 2024 and sell it today you would earn a total of 261.00 from holding Eagle Capital Growth or generate 33.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.26% |
| Values | Daily Returns |
Diamond Hill Investment vs. Eagle Capital Growth
Performance |
| Timeline |
| Diamond Hill Investment |
| Eagle Capital Growth |
Diamond Hill and Eagle Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Eagle Capital
The main advantage of trading using opposite Diamond Hill and Eagle Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Eagle Capital 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 Eagle Capital will offset losses from the drop in Eagle Capital'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 |
| Eagle Capital vs. Eaton Vance New | Eagle Capital vs. Pimco New York | Eagle Capital vs. Nuveen Amt Free Municipal | Eagle Capital vs. Western Asset Municipal |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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