Correlation Between Diamond Hill and Thunder Bridge
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Thunder Bridge 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 Thunder Bridge 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 Thunder Bridge Capital, you can compare the effects of market volatilities on Diamond Hill and Thunder Bridge 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 Thunder Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Thunder Bridge.
Diversification Opportunities for Diamond Hill and Thunder Bridge
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Thunder is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Thunder Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Bridge Capital 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 Thunder Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Bridge Capital has no effect on the direction of Diamond Hill i.e., Diamond Hill and Thunder Bridge go up and down completely randomly.
Pair Corralation between Diamond Hill and Thunder Bridge
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 1.41 times more return on investment than Thunder Bridge. However, Diamond Hill is 1.41 times more volatile than Thunder Bridge Capital. It trades about 0.25 of its potential returns per unit of risk. Thunder Bridge Capital is currently generating about 0.22 per unit of risk. If you would invest 14,959 in Diamond Hill Investment on September 1, 2024 and sell it today you would earn a total of 1,576 from holding Diamond Hill Investment or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Thunder Bridge Capital
Performance |
| Timeline |
| Diamond Hill Investment |
| Thunder Bridge Capital |
Diamond Hill and Thunder Bridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Thunder Bridge
The main advantage of trading using opposite Diamond Hill and Thunder Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Thunder Bridge 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 Thunder Bridge will offset losses from the drop in Thunder Bridge'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 |
| Thunder Bridge vs. Visa Class A | Thunder Bridge vs. Diamond Hill Investment | Thunder Bridge vs. Distoken Acquisition | Thunder Bridge vs. Associated Capital 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.
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