Correlation Between Diamond Hill and Gateway Fund
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Gateway Fund 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 Gateway Fund 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 Gateway Fund Class, you can compare the effects of market volatilities on Diamond Hill and Gateway Fund 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 Gateway Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Gateway Fund.
Diversification Opportunities for Diamond Hill and Gateway Fund
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamond and Gateway is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Gateway Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Fund Class 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 Gateway Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Fund Class has no effect on the direction of Diamond Hill i.e., Diamond Hill and Gateway Fund go up and down completely randomly.
Pair Corralation between Diamond Hill and Gateway Fund
Assuming the 90 days horizon Diamond Hill Long Short is expected to under-perform the Gateway Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Diamond Hill Long Short is 1.31 times less risky than Gateway Fund. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Gateway Fund Class is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,697 in Gateway Fund Class on November 27, 2024 and sell it today you would lose (11.00) from holding Gateway Fund Class or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Long Short vs. Gateway Fund Class
Performance |
| Timeline |
| Diamond Hill Long |
| Gateway Fund Class |
Diamond Hill and Gateway Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Gateway Fund
The main advantage of trading using opposite Diamond Hill and Gateway Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Gateway Fund 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 Gateway Fund will offset losses from the drop in Gateway Fund's 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 |
| Gateway Fund vs. Transamerica Asset Allocation | Gateway Fund vs. Small Pany Growth | Gateway Fund vs. L Mason Qs | Gateway Fund vs. Profunds Large Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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