Correlation Between Diamond Hill and BlackRock Utility

Can any of the company-specific risk be diversified away by investing in both Diamond Hill and BlackRock Utility 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 BlackRock Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diamond Hill Investment and BlackRock Utility Infrastructure, you can compare the effects of market volatilities on Diamond Hill and BlackRock Utility 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 BlackRock Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and BlackRock Utility.

Diversification Opportunities for Diamond Hill and BlackRock Utility

0.0

Correlation Coefficient

Diamond Hill  BlackRock Utility

Pay attention - limited upside

The 3 months correlation between Diamond and BlackRock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and BlackRock Utility Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Utility 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 Investment are associated (or correlated) with BlackRock Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Utility has no effect on the direction of Diamond Hill i.e., Diamond Hill and BlackRock Utility go up and down completely randomly.

Pair Corralation between Diamond Hill and BlackRock Utility

Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 2.2 times more return on investment than BlackRock Utility. However, Diamond Hill is 2.2 times more volatile than BlackRock Utility Infrastructure. It trades about 0.05 of its potential returns per unit of risk. BlackRock Utility Infrastructure is currently generating about 0.02 per unit of risk. If you would invest  15,282  in Diamond Hill Investment on September 15, 2024 and sell it today you would earn a total of  664.00  from holding Diamond Hill Investment or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Diamond Hill Investment  vs.  BlackRock Utility Infrastructu

Diamond Hill Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BlackRock Utility

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Utility Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BlackRock Utility is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Diamond Hill and BlackRock Utility

The main advantage of trading using opposite Diamond Hill and BlackRock Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, BlackRock Utility 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 BlackRock Utility will offset losses from the drop in BlackRock Utility's long position.

The idea behind Diamond Hill Investment and BlackRock Utility Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.