Correlation Between Diamond Hill and Winmark
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Winmark 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 Winmark 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 Winmark, you can compare the effects of market volatilities on Diamond Hill and Winmark 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 Winmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Winmark.
Diversification Opportunities for Diamond Hill and Winmark
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Winmark is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark 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 Winmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winmark has no effect on the direction of Diamond Hill i.e., Diamond Hill and Winmark go up and down completely randomly.
Pair Corralation between Diamond Hill and Winmark
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.42 times more return on investment than Winmark. However, Diamond Hill Investment is 2.36 times less risky than Winmark. It trades about -0.1 of its potential returns per unit of risk. Winmark is currently generating about -0.1 per unit of risk. If you would invest 15,001 in Diamond Hill Investment on November 18, 2024 and sell it today you would lose (216.00) from holding Diamond Hill Investment or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Winmark
Performance |
| Timeline |
| Diamond Hill Investment |
| Winmark |
Diamond Hill and Winmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Winmark
The main advantage of trading using opposite Diamond Hill and Winmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Winmark 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 Winmark will offset losses from the drop in Winmark'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 |
| Winmark vs. Mesa Laboratories | Winmark vs. Utah Medical Products | Winmark vs. Weyco Group | Winmark vs. Diamond Hill Investment |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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