Correlation Between National Western and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both National Western 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 National Western and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Western Life and Diamond Hill Investment, you can compare the effects of market volatilities on National Western 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 National Western with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Western and Diamond Hill.
Diversification Opportunities for National Western and Diamond Hill
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Diamond is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Western Life 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 National Western 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 National Western Life 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 National Western i.e., National Western and Diamond Hill go up and down completely randomly.
Pair Corralation between National Western and Diamond Hill
If you would invest 15,367 in Diamond Hill Investment on August 31, 2024 and sell it today you would earn a total of 1,260 from holding Diamond Hill Investment or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
National Western Life vs. Diamond Hill Investment
Performance |
| Timeline |
| National Western Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Diamond Hill Investment |
National Western and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Western and Diamond Hill
The main advantage of trading using opposite National Western and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Western 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.| National Western vs. MetLife Preferred Stock | National Western vs. Prudential Public Limited | National Western vs. CNO Financial Group | National Western vs. FG Annuities Life |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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