Correlation Between Polen Growth and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Polen Growth 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 Polen Growth and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polen Growth Fund and Diamond Hill All, you can compare the effects of market volatilities on Polen Growth 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 Polen Growth with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polen Growth and Diamond Hill.
Diversification Opportunities for Polen Growth and Diamond Hill
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polen and Diamond is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Polen Growth Fund and Diamond Hill All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill All and Polen Growth 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 Polen Growth Fund 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 All has no effect on the direction of Polen Growth i.e., Polen Growth and Diamond Hill go up and down completely randomly.
Pair Corralation between Polen Growth and Diamond Hill
Assuming the 90 days horizon Polen Growth Fund is expected to generate 0.91 times more return on investment than Diamond Hill. However, Polen Growth Fund is 1.1 times less risky than Diamond Hill. It trades about 0.1 of its potential returns per unit of risk. Diamond Hill All is currently generating about 0.08 per unit of risk. If you would invest 3,072 in Polen Growth Fund on August 28, 2024 and sell it today you would earn a total of 1,919 from holding Polen Growth Fund or generate 62.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polen Growth Fund vs. Diamond Hill All
Performance |
| Timeline |
| Polen Growth |
| Diamond Hill All |
Polen Growth and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polen Growth and Diamond Hill
The main advantage of trading using opposite Polen Growth and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polen Growth 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.| Polen Growth vs. Congress Mid Cap | Polen Growth vs. Wcm Focused International | Polen Growth vs. Polen Growth Fund | Polen Growth vs. Polen International Growth |
| Diamond Hill vs. Congress Mid Cap | Diamond Hill vs. Diamond Hill Long Short | Diamond Hill vs. Diamond Hill All | Diamond Hill vs. Diamond Hill Large |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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