Correlation Between Diamond Hill and US Global

Can any of the company-specific risk be diversified away by investing in both Diamond Hill and US Global 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 US Global 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 US Global Investors, you can compare the effects of market volatilities on Diamond Hill and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and US Global.

Diversification Opportunities for Diamond Hill and US Global

0.28

Correlation Coefficient

Diamond Hill  US Global

Modest diversification

The 3 months correlation between Diamond and GROW is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and US Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Investors 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Investors has no effect on the direction of Diamond Hill i.e., Diamond Hill and US Global go up and down completely randomly.

Pair Corralation between Diamond Hill and US Global

Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the US Global. In addition to that, Diamond Hill is 1.07 times more volatile than US Global Investors. It trades about -0.07 of its total potential returns per unit of risk. US Global Investors is currently generating about -0.05 per unit of volatility. If you would invest  240.00  in US Global Investors on December 28, 2024 and sell it today you would lose (8.00) from holding US Global Investors or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Diamond Hill Investment  vs.  US Global Investors

Diamond Hill Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

US Global Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Diamond Hill and US Global

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

The idea behind Diamond Hill Investment and US Global Investors 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.