Correlation Between Diamond Hill and Valic Company
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Valic Company 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 Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Small and Valic Company I, you can compare the effects of market volatilities on Diamond Hill and Valic Company 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 Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Valic Company.
Diversification Opportunities for Diamond Hill and Valic Company
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamond and Valic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Small and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I 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 Small are associated (or correlated) with Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Diamond Hill i.e., Diamond Hill and Valic Company go up and down completely randomly.
Pair Corralation between Diamond Hill and Valic Company
Assuming the 90 days horizon Diamond Hill Small is expected to under-perform the Valic Company. In addition to that, Diamond Hill is 1.37 times more volatile than Valic Company I. It trades about -0.04 of its total potential returns per unit of risk. Valic Company I is currently generating about 0.04 per unit of volatility. If you would invest 1,290 in Valic Company I on October 26, 2024 and sell it today you would earn a total of 33.00 from holding Valic Company I or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Small vs. Valic Company I
Performance |
| Timeline |
| Diamond Hill Small |
| Valic Company I |
Diamond Hill and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Valic Company
The main advantage of trading using opposite Diamond Hill and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.| Diamond Hill vs. Valic Company I | Diamond Hill vs. Walden Smid Cap | Diamond Hill vs. Vanguard Small Cap Value | Diamond Hill vs. William Blair Small |
| Valic Company vs. T Rowe Price | Valic Company vs. Mid Cap Growth | Valic Company vs. L Abbett Growth | Valic Company vs. The Equity 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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