Correlation Between Diamond Hill and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Boston Trust 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 Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Select and Boston Trust Equity, you can compare the effects of market volatilities on Diamond Hill and Boston Trust 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 Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Boston Trust.
Diversification Opportunities for Diamond Hill and Boston Trust
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamond and Boston is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Select and Boston Trust Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Equity 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 Select are associated (or correlated) with Boston Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Trust Equity has no effect on the direction of Diamond Hill i.e., Diamond Hill and Boston Trust go up and down completely randomly.
Pair Corralation between Diamond Hill and Boston Trust
Assuming the 90 days horizon Diamond Hill is expected to generate 1.12 times less return on investment than Boston Trust. In addition to that, Diamond Hill is 1.66 times more volatile than Boston Trust Equity. It trades about 0.08 of its total potential returns per unit of risk. Boston Trust Equity is currently generating about 0.14 per unit of volatility. If you would invest 4,201 in Boston Trust Equity on September 1, 2024 and sell it today you would earn a total of 528.00 from holding Boston Trust Equity or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Select vs. Boston Trust Equity
Performance |
| Timeline |
| Diamond Hill Select |
| Boston Trust Equity |
Diamond Hill and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Boston Trust
The main advantage of trading using opposite Diamond Hill and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Boston Trust 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 Boston Trust will offset losses from the drop in Boston Trust's long position.| Diamond Hill vs. Diamond Hill Large | Diamond Hill vs. Diamond Hill Short | Diamond Hill vs. Diamond Hill Short | Diamond Hill vs. Diamond Hill Large |
| Boston Trust vs. Boston Trust Asset | Boston Trust vs. Boston Trust Small | Boston Trust vs. Walden Asset Management | Boston Trust vs. Diamond Hill Select |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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