Correlation Between Diamond Hill and Goldman Sachs

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

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

Diversification Opportunities for Diamond Hill and Goldman Sachs

0.12

Correlation Coefficient

Diamond Hill  Goldman Sachs

Average diversification

The 3 months correlation between Diamond and Goldman is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Large and Goldman Sachs Gqg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Gqg 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 Large are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Gqg has no effect on the direction of Diamond Hill i.e., Diamond Hill and Goldman Sachs go up and down completely randomly.

Pair Corralation between Diamond Hill and Goldman Sachs

Assuming the 90 days horizon Diamond Hill is expected to generate 13.26 times less return on investment than Goldman Sachs. In addition to that, Diamond Hill is 1.02 times more volatile than Goldman Sachs Gqg. It trades about 0.01 of its total potential returns per unit of risk. Goldman Sachs Gqg is currently generating about 0.16 per unit of volatility. If you would invest  1,959  in Goldman Sachs Gqg on December 30, 2024 and sell it today you would earn a total of  160.00  from holding Goldman Sachs Gqg or generate 8.17% return on investment over 90 days.

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

Diamond Hill Large  vs.  Goldman Sachs Gqg

Diamond Hill Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Hill Large has generated negative risk-adjusted returns adding no value to fund investors. 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.

Goldman Sachs Gqg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Gqg are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Diamond Hill and Goldman Sachs

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

The idea behind Diamond Hill Large and Goldman Sachs Gqg 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.