Correlation Between Diamond Hill and Polen Growth
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Polen Growth 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 Polen Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill All and Polen Growth Fund, you can compare the effects of market volatilities on Diamond Hill and Polen Growth 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 Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Polen Growth.
Diversification Opportunities for Diamond Hill and Polen Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and Polen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill All and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth 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 All are associated (or correlated) with Polen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Growth has no effect on the direction of Diamond Hill i.e., Diamond Hill and Polen Growth go up and down completely randomly.
Pair Corralation between Diamond Hill and Polen Growth
Assuming the 90 days horizon Diamond Hill is expected to generate 1.1 times less return on investment than Polen Growth. In addition to that, Diamond Hill is 1.21 times more volatile than Polen Growth Fund. It trades about 0.1 of its total potential returns per unit of risk. Polen Growth Fund is currently generating about 0.13 per unit of volatility. If you would invest 4,326 in Polen Growth Fund on August 28, 2024 and sell it today you would earn a total of 665.00 from holding Polen Growth Fund or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill All vs. Polen Growth Fund
Performance |
| Timeline |
| Diamond Hill All |
| Polen Growth |
Diamond Hill and Polen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Polen Growth
The main advantage of trading using opposite Diamond Hill and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Polen Growth 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 Polen Growth will offset losses from the drop in Polen Growth's long position.| Diamond Hill vs. Congress Mid Cap | Diamond Hill vs. Diamond Hill Long Short | Diamond Hill vs. Diamond Hill All | Diamond Hill vs. Diamond Hill Large |
| Polen Growth vs. Congress Mid Cap | Polen Growth vs. Wcm Focused International | Polen Growth vs. Polen Growth Fund | Polen Growth vs. Polen International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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