Correlation Between Diamond Hill and Fisher Investments

Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Fisher Investments 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 Fisher Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diamond Hill International and Fisher Large Cap, you can compare the effects of market volatilities on Diamond Hill and Fisher Investments 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 Fisher Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Fisher Investments.

Diversification Opportunities for Diamond Hill and Fisher Investments

0.45

Correlation Coefficient

Diamond Hill  Fisher Investments

Very weak diversification

The 3 months correlation between Diamond and Fisher is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill International and Fisher Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Investments 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 International are associated (or correlated) with Fisher Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Investments has no effect on the direction of Diamond Hill i.e., Diamond Hill and Fisher Investments go up and down completely randomly.

Pair Corralation between Diamond Hill and Fisher Investments

Assuming the 90 days horizon Diamond Hill International is expected to generate 0.73 times more return on investment than Fisher Investments. However, Diamond Hill International is 1.37 times less risky than Fisher Investments. It trades about 0.04 of its potential returns per unit of risk. Fisher Large Cap is currently generating about -0.09 per unit of risk. If you would invest  1,774  in Diamond Hill International on December 2, 2024 and sell it today you would earn a total of  27.00  from holding Diamond Hill International or generate 1.52% return on investment over 90 days.

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

Diamond Hill International  vs.  Fisher Large Cap

Diamond Hill Interna

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill International are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Diamond Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fisher Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fisher Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fisher Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Diamond Hill and Fisher Investments

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

The idea behind Diamond Hill International and Fisher Large Cap 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.