Correlation Between Diamond Hill and Cartesian Growth
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Cartesian Growth 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 Cartesian Growth 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 Cartesian Growth, you can compare the effects of market volatilities on Diamond Hill and Cartesian Growth 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 Cartesian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Cartesian Growth.
Diversification Opportunities for Diamond Hill and Cartesian Growth
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diamond and Cartesian is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian 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 Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Diamond Hill i.e., Diamond Hill and Cartesian Growth go up and down completely randomly.
Pair Corralation between Diamond Hill and Cartesian Growth
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Cartesian Growth. In addition to that, Diamond Hill is 6.31 times more volatile than Cartesian Growth. It trades about -0.11 of its total potential returns per unit of risk. Cartesian Growth is currently generating about -0.03 per unit of volatility. If you would invest 1,170 in Cartesian Growth on November 27, 2024 and sell it today you would lose (1.00) from holding Cartesian Growth or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Cartesian Growth
Performance |
| Timeline |
| Diamond Hill Investment |
| Cartesian Growth |
Diamond Hill and Cartesian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Cartesian Growth
The main advantage of trading using opposite Diamond Hill and Cartesian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Cartesian Growth 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 Cartesian Growth will offset losses from the drop in Cartesian Growth'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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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