Correlation Between Diamond Hill and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Arbitrage 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 Arbitrage 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 The Arbitrage Fund, you can compare the effects of market volatilities on Diamond Hill and Arbitrage 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 Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Arbitrage Fund.
Diversification Opportunities for Diamond Hill and Arbitrage Fund
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Diamond and Arbitrage is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Fund 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 Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of Diamond Hill i.e., Diamond Hill and Arbitrage Fund go up and down completely randomly.
Pair Corralation between Diamond Hill and Arbitrage Fund
Assuming the 90 days horizon Diamond Hill Long Short is expected to under-perform the Arbitrage Fund. In addition to that, Diamond Hill is 1.99 times more volatile than The Arbitrage Fund. It trades about -0.03 of its total potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.03 per unit of volatility. If you would invest 1,296 in The Arbitrage Fund on August 29, 2024 and sell it today you would earn a total of 6.00 from holding The Arbitrage Fund or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Long Short vs. The Arbitrage Fund
Performance |
| Timeline |
| Diamond Hill Long |
| Arbitrage Fund |
Diamond Hill and Arbitrage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Arbitrage Fund
The main advantage of trading using opposite Diamond Hill and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Arbitrage 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.| Diamond Hill vs. Neuberger Berman Long | Diamond Hill vs. Neuberger Berman Long | Diamond Hill vs. Pimco Rae Worldwide |
| Arbitrage Fund vs. The Merger Fund | Arbitrage Fund vs. Calamos Market Neutral | Arbitrage Fund vs. Hussman Strategic Growth | Arbitrage Fund vs. Gateway Fund Class |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |