Correlation Between Diamond Hill and Icon Long/short
Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Icon Long/short 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 Icon Long/short 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 Icon Longshort Fund, you can compare the effects of market volatilities on Diamond Hill and Icon Long/short 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 Icon Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Icon Long/short.
Diversification Opportunities for Diamond Hill and Icon Long/short
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diamond and Icon is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Long/short 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 Icon Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Long/short has no effect on the direction of Diamond Hill i.e., Diamond Hill and Icon Long/short go up and down completely randomly.
Pair Corralation between Diamond Hill and Icon Long/short
Assuming the 90 days horizon Diamond Hill Long Short is expected to under-perform the Icon Long/short. But the mutual fund apears to be less risky and, when comparing its historical volatility, Diamond Hill Long Short is 3.06 times less risky than Icon Long/short. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Icon Longshort Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,689 in Icon Longshort Fund on August 28, 2024 and sell it today you would earn a total of 258.00 from holding Icon Longshort Fund or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Long Short vs. Icon Longshort Fund
Performance |
| Timeline |
| Diamond Hill Long |
| Icon Long/short |
Diamond Hill and Icon Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Icon Long/short
The main advantage of trading using opposite Diamond Hill and Icon Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Icon Long/short 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 Icon Long/short will offset losses from the drop in Icon Long/short's long position.| Diamond Hill vs. Diamond Hill Large | Diamond Hill vs. Diamond Hill International | Diamond Hill vs. Diamond Hill International | Diamond Hill vs. Diamond Hill Small Mid |
| Icon Long/short vs. Boston Partners Longshort | Icon Long/short vs. Diamond Hill Long Short | Icon Long/short vs. Jpmorgan Research Market | Icon Long/short vs. Calamos Market Neutral |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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