Correlation Between Diamond Hill and Munivest Fund

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

Diversification Opportunities for Diamond Hill and Munivest Fund

-0.07

Correlation Coefficient

Diamond Hill  Munivest Fund

Good diversification

The 3 months correlation between Diamond and Munivest is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Diamond Hill i.e., Diamond Hill and Munivest Fund go up and down completely randomly.

Pair Corralation between Diamond Hill and Munivest Fund

Given the investment horizon of 90 days Diamond Hill is expected to generate 44.35 times less return on investment than Munivest Fund. In addition to that, Diamond Hill is 1.7 times more volatile than Munivest Fund. It trades about 0.0 of its total potential returns per unit of risk. Munivest Fund is currently generating about 0.24 per unit of volatility. If you would invest  718.00  in Munivest Fund on September 7, 2024 and sell it today you would earn a total of  26.00  from holding Munivest Fund or generate 3.62% return on investment over 90 days.

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

Diamond Hill Investment  vs.  Munivest Fund

Diamond Hill Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward indicators, Diamond Hill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Munivest Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Diamond Hill and Munivest Fund

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

The idea behind Diamond Hill Investment and Munivest Fund 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.