Correlation Between Salient Select and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Salient Select 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 Salient Select and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Select Income and Diamond Hill Long Short, you can compare the effects of market volatilities on Salient Select 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 Salient Select with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Select and Diamond Hill.
Diversification Opportunities for Salient Select and Diamond Hill
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Salient and Diamond is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Salient Select Income and Diamond Hill Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Long and Salient Select 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 Salient Select Income 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 Long has no effect on the direction of Salient Select i.e., Salient Select and Diamond Hill go up and down completely randomly.
Pair Corralation between Salient Select and Diamond Hill
Assuming the 90 days horizon Salient Select Income is expected to generate 1.24 times more return on investment than Diamond Hill. However, Salient Select is 1.24 times more volatile than Diamond Hill Long Short. It trades about 0.1 of its potential returns per unit of risk. Diamond Hill Long Short is currently generating about 0.11 per unit of risk. If you would invest 1,580 in Salient Select Income on August 30, 2024 and sell it today you would earn a total of 375.00 from holding Salient Select Income or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Select Income vs. Diamond Hill Long Short
Performance |
| Timeline |
| Salient Select Income |
| Diamond Hill Long |
Salient Select and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Select and Diamond Hill
The main advantage of trading using opposite Salient Select and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Select 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.| Salient Select vs. Cohen Steers Prfrd | Salient Select vs. Cohen Steers Preferd | Salient Select vs. Cohen Steers Prefrd | Salient Select vs. Cohen Steers Preferred |
| Diamond Hill vs. Gateway Fund Class | Diamond Hill vs. Aqr Managed Futures | Diamond Hill vs. Boston Partners Longshort | Diamond Hill 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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