Correlation Between Diamond Hill and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Long Short and Goldman Sachs Absolute, you can compare the effects of market volatilities on Diamond Hill and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Goldman Sachs.
Diversification Opportunities for Diamond Hill and Goldman Sachs
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Diamond and Goldman is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute 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 Long Short are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Absolute has no effect on the direction of Diamond Hill i.e., Diamond Hill and Goldman Sachs go up and down completely randomly.
Pair Corralation between Diamond Hill and Goldman Sachs
Assuming the 90 days horizon Diamond Hill is expected to generate 1.1 times less return on investment than Goldman Sachs. In addition to that, Diamond Hill is 1.61 times more volatile than Goldman Sachs Absolute. It trades about 0.05 of its total potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.1 per unit of volatility. If you would invest 864.00 in Goldman Sachs Absolute on September 3, 2024 and sell it today you would earn a total of 155.00 from holding Goldman Sachs Absolute or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Long Short vs. Goldman Sachs Absolute
Performance |
| Timeline |
| Diamond Hill Long |
| Goldman Sachs Absolute |
Diamond Hill and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Goldman Sachs
The main advantage of trading using opposite Diamond Hill and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Diamond Hill vs. Gateway Fund Class | Diamond Hill vs. Aqr Managed Futures | Diamond Hill vs. Boston Partners Longshort | Diamond Hill vs. Calamos Market Neutral |
| Goldman Sachs vs. Jpmorgan Dynamic Small | Goldman Sachs vs. Guggenheim Managed Futures | Goldman Sachs vs. Diamond Hill Long Short | Goldman Sachs vs. Ivy Mid Cap |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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