Correlation Between Diamond Hill and OneMain Holdings
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and OneMain Holdings 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 OneMain Holdings 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 OneMain Holdings, you can compare the effects of market volatilities on Diamond Hill and OneMain Holdings 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 OneMain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and OneMain Holdings.
Diversification Opportunities for Diamond Hill and OneMain Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamond and OneMain is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Diamond Hill i.e., Diamond Hill and OneMain Holdings go up and down completely randomly.
Pair Corralation between Diamond Hill and OneMain Holdings
Given the investment horizon of 90 days Diamond Hill is expected to generate 2.86 times less return on investment than OneMain Holdings. But when comparing it to its historical volatility, Diamond Hill Investment is 1.28 times less risky than OneMain Holdings. It trades about 0.16 of its potential returns per unit of risk. OneMain Holdings is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 4,658 in OneMain Holdings on August 30, 2024 and sell it today you would earn a total of 1,039 from holding OneMain Holdings or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. OneMain Holdings
Performance |
| Timeline |
| Diamond Hill Investment |
| OneMain Holdings |
Diamond Hill and OneMain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and OneMain Holdings
The main advantage of trading using opposite Diamond Hill and OneMain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, OneMain Holdings 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 OneMain Holdings will offset losses from the drop in OneMain Holdings' 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 |
| OneMain Holdings vs. Oaktree Specialty Lending | OneMain Holdings vs. Barings BDC | OneMain Holdings vs. Runway Growth Finance | OneMain Holdings vs. Ally 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |