Correlation Between Diamond Hill and Pioneer High

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

Diversification Opportunities for Diamond Hill and Pioneer High

-0.35

Correlation Coefficient

Diamond Hill  Pioneer High

Very good diversification

The 3 months correlation between Diamond and Pioneer is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Pioneer High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Income 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 Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Income has no effect on the direction of Diamond Hill i.e., Diamond Hill and Pioneer High go up and down completely randomly.

Pair Corralation between Diamond Hill and Pioneer High

Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Pioneer High. In addition to that, Diamond Hill is 3.21 times more volatile than Pioneer High Income. It trades about -0.11 of its total potential returns per unit of risk. Pioneer High Income is currently generating about 0.13 per unit of volatility. If you would invest  774.00  in Pioneer High Income on December 2, 2024 and sell it today you would earn a total of  14.00  from holding Pioneer High Income or generate 1.81% 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.  Pioneer High Income

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 unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pioneer High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Pioneer High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Diamond Hill and Pioneer High

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

The idea behind Diamond Hill Investment and Pioneer High Income 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.