Correlation Between Diamond Hill and Knights Of

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

By analyzing existing cross correlation between Diamond Hill Long Short and Knights Of Columbus, you can compare the effects of market volatilities on Diamond Hill and Knights Of 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 Knights Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Knights Of.

Diversification Opportunities for Diamond Hill and Knights Of

-0.53

Correlation Coefficient

Diamond Hill  Knights Of

Excellent diversification

The 3 months correlation between Diamond and Knights is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Knights Of Columbus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knights Of Columbus 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 Long Short are associated (or correlated) with Knights Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knights Of Columbus has no effect on the direction of Diamond Hill i.e., Diamond Hill and Knights Of go up and down completely randomly.

Pair Corralation between Diamond Hill and Knights Of

Assuming the 90 days horizon Diamond Hill is expected to generate 2.28 times less return on investment than Knights Of. In addition to that, Diamond Hill is 2.02 times more volatile than Knights Of Columbus. It trades about 0.02 of its total potential returns per unit of risk. Knights Of Columbus is currently generating about 0.11 per unit of volatility. If you would invest  1,027  in Knights Of Columbus on October 8, 2024 and sell it today you would earn a total of  179.00  from holding Knights Of Columbus or generate 17.43% return on investment over 90 days.

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

Diamond Hill Long Short  vs.  Knights Of Columbus

Diamond Hill Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Knights Of Columbus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knights Of Columbus are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Knights Of 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 Knights Of

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

The idea behind Diamond Hill Long Short and Knights Of Columbus 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.