Correlation Between Sycamore Entmt and Diamond Hill

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

By analyzing existing cross correlation between Sycamore Entmt Grp and Diamond Hill Long Short, you can compare the effects of market volatilities on Sycamore Entmt and Diamond Hill 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 Sycamore Entmt with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sycamore Entmt and Diamond Hill.

Diversification Opportunities for Sycamore Entmt and Diamond Hill

-0.51

Correlation Coefficient

Sycamore Entmt  Diamond Hill

Excellent diversification

The 3 months correlation between Sycamore and Diamond is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sycamore Entmt Grp and Diamond Hill Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Long and Sycamore Entmt 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 Sycamore Entmt Grp are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Long has no effect on the direction of Sycamore Entmt i.e., Sycamore Entmt and Diamond Hill go up and down completely randomly.

Pair Corralation between Sycamore Entmt and Diamond Hill

Given the investment horizon of 90 days Sycamore Entmt Grp is expected to generate 24.45 times more return on investment than Diamond Hill. However, Sycamore Entmt is 24.45 times more volatile than Diamond Hill Long Short. It trades about 0.05 of its potential returns per unit of risk. Diamond Hill Long Short is currently generating about 0.07 per unit of risk. If you would invest  0.08  in Sycamore Entmt Grp on December 29, 2024 and sell it today you would lose (0.01) from holding Sycamore Entmt Grp or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Sycamore Entmt Grp  vs.  Diamond Hill Long Short

Sycamore Entmt Grp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sycamore Entmt Grp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Sycamore Entmt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Diamond Hill Long

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Long Short are ranked lower than 5 (%) 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.

Pair Trading with Sycamore Entmt and Diamond Hill

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

The idea behind Sycamore Entmt Grp and Diamond Hill Long Short 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.