Correlation Between Diamond Hill and Xp
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Xp 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 Xp 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 Xp Inc, you can compare the effects of market volatilities on Diamond Hill and Xp 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 Xp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Xp.
Diversification Opportunities for Diamond Hill and Xp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Xp is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Diamond Hill i.e., Diamond Hill and Xp go up and down completely randomly.
Pair Corralation between Diamond Hill and Xp
Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 0.63 times more return on investment than Xp. However, Diamond Hill Investment is 1.59 times less risky than Xp. It trades about 0.03 of its potential returns per unit of risk. Xp Inc is currently generating about -0.04 per unit of risk. If you would invest 15,442 in Diamond Hill Investment on August 25, 2024 and sell it today you would earn a total of 1,614 from holding Diamond Hill Investment or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Xp Inc
Performance |
| Timeline |
| Diamond Hill Investment |
| Xp Inc |
Diamond Hill and Xp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Xp
The main advantage of trading using opposite Diamond Hill and Xp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Xp 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 Xp will offset losses from the drop in Xp'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 |
| Xp vs. Visa Class A | Xp vs. Diamond Hill Investment | Xp vs. Distoken Acquisition | Xp vs. AllianceBernstein Holding LP |
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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