Correlation Between Diamond Hill and Target Global

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

Diversification Opportunities for Diamond Hill and Target Global

0.0

Correlation Coefficient

Diamond Hill  Target Global

Pay attention - limited upside

The 3 months correlation between Diamond and Target is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Target Global Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Global Acquisition 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 Target Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Global Acquisition has no effect on the direction of Diamond Hill i.e., Diamond Hill and Target Global go up and down completely randomly.

Pair Corralation between Diamond Hill and Target Global

If you would invest (100.00) in Target Global Acquisition on December 5, 2024 and sell it today you would earn a total of  100.00  from holding Target Global Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Diamond Hill Investment  vs.  Target Global Acquisition

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 latest unfluctuating performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Target Global Acquisition

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Diamond Hill and Target Global

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

The idea behind Diamond Hill Investment and Target Global Acquisition 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.