Correlation Between Diamond Hill and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Champlain Small 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 Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Large and Champlain Small, you can compare the effects of market volatilities on Diamond Hill and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Champlain Small.
Diversification Opportunities for Diamond Hill and Champlain Small
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamond and Champlain is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Large and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small 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 Large are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Diamond Hill i.e., Diamond Hill and Champlain Small go up and down completely randomly.
Pair Corralation between Diamond Hill and Champlain Small
Assuming the 90 days horizon Diamond Hill Large is expected to under-perform the Champlain Small. In addition to that, Diamond Hill is 2.09 times more volatile than Champlain Small. It trades about -0.25 of its total potential returns per unit of risk. Champlain Small is currently generating about 0.17 per unit of volatility. If you would invest 2,472 in Champlain Small on September 15, 2024 and sell it today you would earn a total of 79.00 from holding Champlain Small or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Large vs. Champlain Small
Performance |
| Timeline |
| Diamond Hill Large |
| Champlain Small |
Diamond Hill and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Champlain Small
The main advantage of trading using opposite Diamond Hill and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Diamond Hill vs. John Hancock Global | Diamond Hill vs. Edgewood Growth Fund | Diamond Hill vs. Hartford Schroders Emerging | Diamond Hill vs. Nuveen Intermediate Duration |
| Champlain Small vs. Champlain Mid Cap | Champlain Small vs. Aberdeen Select International | Champlain Small vs. Marsico 21st Century | Champlain Small vs. Diamond Hill Large |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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