Correlation Between Diamond Hill and Magic Empire
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Magic Empire 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 Magic Empire 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 Magic Empire Global, you can compare the effects of market volatilities on Diamond Hill and Magic Empire 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 Magic Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Magic Empire.
Diversification Opportunities for Diamond Hill and Magic Empire
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Diamond and Magic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global 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 Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Diamond Hill i.e., Diamond Hill and Magic Empire go up and down completely randomly.
Pair Corralation between Diamond Hill and Magic Empire
Given the investment horizon of 90 days Diamond Hill is expected to generate 84.73 times less return on investment than Magic Empire. But when comparing it to its historical volatility, Diamond Hill Investment is 10.59 times less risky than Magic Empire. It trades about 0.0 of its potential returns per unit of risk. Magic Empire Global is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Magic Empire Global on September 12, 2024 and sell it today you would lose (86.00) from holding Magic Empire Global or give up 62.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Magic Empire Global
Performance |
| Timeline |
| Diamond Hill Investment |
| Magic Empire Global |
Diamond Hill and Magic Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Magic Empire
The main advantage of trading using opposite Diamond Hill and Magic Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Magic Empire 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 Magic Empire will offset losses from the drop in Magic Empire's long position.| Diamond Hill vs. Gladstone Investment | Diamond Hill vs. Stellus Capital Investment | Diamond Hill vs. Prospect Capital | Diamond Hill vs. Gladstone Capital |
| Magic Empire vs. Netcapital | Magic Empire vs. Applied Blockchain | Magic Empire vs. Top KingWin Ltd | Magic Empire vs. Zhong Yang Financial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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