Correlation Between Diamond Hill and Trinity Capital
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Trinity Capital 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 Trinity Capital 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 Trinity Capital, you can compare the effects of market volatilities on Diamond Hill and Trinity Capital 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 Trinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Trinity Capital.
Diversification Opportunities for Diamond Hill and Trinity Capital
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Trinity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of Diamond Hill i.e., Diamond Hill and Trinity Capital go up and down completely randomly.
Pair Corralation between Diamond Hill and Trinity Capital
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 1.38 times more return on investment than Trinity Capital. However, Diamond Hill is 1.38 times more volatile than Trinity Capital. It trades about 0.21 of its potential returns per unit of risk. Trinity Capital is currently generating about 0.09 per unit of risk. If you would invest 15,541 in Diamond Hill Investment on August 28, 2024 and sell it today you would earn a total of 1,399 from holding Diamond Hill Investment or generate 9.0% 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. Trinity Capital
Performance |
| Timeline |
| Diamond Hill Investment |
| Trinity Capital |
Diamond Hill and Trinity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Trinity Capital
The main advantage of trading using opposite Diamond Hill and Trinity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Trinity Capital 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 Trinity Capital will offset losses from the drop in Trinity Capital'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 |
| Trinity Capital vs. PowerUp Acquisition Corp | Trinity Capital vs. Aurora Innovation | Trinity Capital vs. HUMANA INC | Trinity Capital vs. Aquagold International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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