Correlation Between Ercros and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Ercros 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 Ercros and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ercros and Diamond Hill Investment, you can compare the effects of market volatilities on Ercros 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 Ercros with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ercros and Diamond Hill.
Diversification Opportunities for Ercros and Diamond Hill
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ercros and Diamond is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ercros and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Ercros 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 Ercros 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 Investment has no effect on the direction of Ercros i.e., Ercros and Diamond Hill go up and down completely randomly.
Pair Corralation between Ercros and Diamond Hill
Assuming the 90 days trading horizon Ercros is expected to generate 1.43 times more return on investment than Diamond Hill. However, Ercros is 1.43 times more volatile than Diamond Hill Investment. It trades about 0.02 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.0 per unit of risk. If you would invest 305.00 in Ercros on January 26, 2024 and sell it today you would earn a total of 48.00 from holding Ercros or generate 15.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.82% |
Values | Daily Returns |
Ercros vs. Diamond Hill Investment
Performance |
Timeline |
Ercros |
Diamond Hill Investment |
Ercros and Diamond Hill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ercros and Diamond Hill
The main advantage of trading using opposite Ercros and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ercros 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.Ercros vs. CIE Automotive SA | Ercros vs. Mapfre | Ercros vs. ArcelorMittal SA | Ercros vs. ACS Actividades de |
Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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