Correlation Between Diamond Hill and Saratoga Investment
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Saratoga Investment 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 Saratoga Investment 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 Saratoga Investment Corp, you can compare the effects of market volatilities on Diamond Hill and Saratoga Investment 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 Saratoga Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Saratoga Investment.
Diversification Opportunities for Diamond Hill and Saratoga Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Saratoga is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment Corp 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Diamond Hill i.e., Diamond Hill and Saratoga Investment go up and down completely randomly.
Pair Corralation between Diamond Hill and Saratoga Investment
Given the investment horizon of 90 days Diamond Hill is expected to generate 7.04 times less return on investment than Saratoga Investment. In addition to that, Diamond Hill is 6.12 times more volatile than Saratoga Investment Corp. It trades about 0.0 of its total potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.15 per unit of volatility. If you would invest 2,179 in Saratoga Investment Corp on August 31, 2024 and sell it today you would earn a total of 366.00 from holding Saratoga Investment Corp or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Diamond Hill Investment vs. Saratoga Investment Corp
Performance |
| Timeline |
| Diamond Hill Investment |
| Saratoga Investment Corp |
Diamond Hill and Saratoga Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Saratoga Investment
The main advantage of trading using opposite Diamond Hill and Saratoga Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Saratoga Investment 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 Saratoga Investment will offset losses from the drop in Saratoga Investment'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 |
| Saratoga Investment vs. Kura Sushi USA | Saratoga Investment vs. Western Asset Investment | Saratoga Investment vs. Dennys Corp | Saratoga Investment vs. Rave Restaurant Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |