Correlation Between Diamond Hill and National Western
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and National Western 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 National Western 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 National Western Life, you can compare the effects of market volatilities on Diamond Hill and National Western 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 National Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and National Western.
Diversification Opportunities for Diamond Hill and National Western
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and National is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and National Western Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Western Life 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 National Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Western Life has no effect on the direction of Diamond Hill i.e., Diamond Hill and National Western go up and down completely randomly.
Pair Corralation between Diamond Hill and National Western
If you would invest 15,367 in Diamond Hill Investment on August 31, 2024 and sell it today you would earn a total of 1,260 from holding Diamond Hill Investment or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Diamond Hill Investment vs. National Western Life
Performance |
| Timeline |
| Diamond Hill Investment |
| National Western Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Diamond Hill and National Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and National Western
The main advantage of trading using opposite Diamond Hill and National Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, National Western 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 National Western will offset losses from the drop in National Western'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 |
| National Western vs. MetLife Preferred Stock | National Western vs. Prudential Public Limited | National Western vs. CNO Financial Group | National Western vs. FG Annuities Life |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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