Correlation Between Diamond Hill and Silvercrest Asset

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

Diversification Opportunities for Diamond Hill and Silvercrest Asset

0.39

Correlation Coefficient

Diamond Hill  Silvercrest Asset

Weak diversification

The 3 months correlation between Diamond and Silvercrest is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset 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 Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of Diamond Hill i.e., Diamond Hill and Silvercrest Asset go up and down completely randomly.

Pair Corralation between Diamond Hill and Silvercrest Asset

Given the investment horizon of 90 days Diamond Hill is expected to generate 5.41 times less return on investment than Silvercrest Asset. But when comparing it to its historical volatility, Diamond Hill Investment is 1.22 times less risky than Silvercrest Asset. It trades about 0.02 of its potential returns per unit of risk. Silvercrest Asset Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,652  in Silvercrest Asset Management on October 6, 2024 and sell it today you would earn a total of  176.00  from holding Silvercrest Asset Management or generate 10.65% return on investment over 90 days.

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

Diamond Hill Investment  vs.  Silvercrest Asset Management

Diamond Hill Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 1 (%) 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Silvercrest Asset

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercrest Asset Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Silvercrest Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Diamond Hill and Silvercrest Asset

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

The idea behind Diamond Hill Investment and Silvercrest Asset Management 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.