Correlation Between Diamond Hill and Manhattan Bridge

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

Diversification Opportunities for Diamond Hill and Manhattan Bridge

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Diamond and Manhattan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Manhattan Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Bridge Capital 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 Manhattan Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Bridge Capital has no effect on the direction of Diamond Hill i.e., Diamond Hill and Manhattan Bridge go up and down completely randomly.

Pair Corralation between Diamond Hill and Manhattan Bridge

Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Manhattan Bridge. In addition to that, Diamond Hill is 1.09 times more volatile than Manhattan Bridge Capital. It trades about -0.01 of its total potential returns per unit of risk. Manhattan Bridge Capital is currently generating about 0.03 per unit of volatility. If you would invest  480.00  in Manhattan Bridge Capital on October 10, 2024 and sell it today you would earn a total of  71.00  from holding Manhattan Bridge Capital or generate 14.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Diamond Hill Investment  vs.  Manhattan Bridge Capital

 Performance 
       Timeline  
Diamond Hill Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Manhattan Bridge Capital 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Bridge Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Manhattan Bridge may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Diamond Hill and Manhattan Bridge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Diamond Hill and Manhattan Bridge

The main advantage of trading using opposite Diamond Hill and Manhattan Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill position performs unexpectedly, Manhattan Bridge 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 Manhattan Bridge will offset losses from the drop in Manhattan Bridge's long position.
The idea behind Diamond Hill Investment and Manhattan Bridge Capital 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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