Correlation Between Diamond Hill and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Westwood Largecap 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 Westwood Largecap 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 Westwood Largecap Value, you can compare the effects of market volatilities on Diamond Hill and Westwood Largecap 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 Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Westwood Largecap.
Diversification Opportunities for Diamond Hill and Westwood Largecap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diamond and Westwood is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Large and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value 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 Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Diamond Hill i.e., Diamond Hill and Westwood Largecap go up and down completely randomly.
Pair Corralation between Diamond Hill and Westwood Largecap
Assuming the 90 days horizon Diamond Hill Large is expected to generate 1.11 times more return on investment than Westwood Largecap. However, Diamond Hill is 1.11 times more volatile than Westwood Largecap Value. It trades about 0.13 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.12 per unit of risk. If you would invest 3,070 in Diamond Hill Large on September 2, 2024 and sell it today you would earn a total of 733.00 from holding Diamond Hill Large or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Large vs. Westwood Largecap Value
Performance |
| Timeline |
| Diamond Hill Large |
| Westwood Largecap Value |
Diamond Hill and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Westwood Largecap
The main advantage of trading using opposite Diamond Hill and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Westwood Largecap 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 Westwood Largecap will offset losses from the drop in Westwood Largecap's long position.| Diamond Hill vs. Loomis Sayles Growth | Diamond Hill vs. Loomis Sayles Growth | Diamond Hill vs. Loomis Sayles Growth |
| Westwood Largecap vs. The Hartford Small | Westwood Largecap vs. Baird Smallmid Cap | Westwood Largecap vs. Champlain Small | Westwood Largecap vs. Small Pany Growth |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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