Correlation Between Great Elm and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Great Elm and Diamond Hill 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 Great Elm and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Group and Diamond Hill Investment, you can compare the effects of market volatilities on Great Elm and Diamond Hill 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 Great Elm with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Diamond Hill.
Diversification Opportunities for Great Elm and Diamond Hill
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Diamond is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Great Elm 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 Great Elm Group are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Great Elm i.e., Great Elm and Diamond Hill go up and down completely randomly.
Pair Corralation between Great Elm and Diamond Hill
Considering the 90-day investment horizon Great Elm Group is expected to generate 1.13 times more return on investment than Diamond Hill. However, Great Elm is 1.13 times more volatile than Diamond Hill Investment. It trades about 0.0 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.0 per unit of risk. If you would invest 186.00 in Great Elm Group on November 9, 2024 and sell it today you would lose (6.00) from holding Great Elm Group or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Group vs. Diamond Hill Investment
Performance |
| Timeline |
| Great Elm Group |
| Diamond Hill Investment |
Great Elm and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Diamond Hill
The main advantage of trading using opposite Great Elm and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Great Elm vs. Investcorp Credit Management | Great Elm vs. Monroe Capital Corp | Great Elm vs. Allianzgi Convertible Income | Great Elm vs. John Hancock Income |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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