Correlation Between Golub Capital and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Golub Capital 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 Golub Capital and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golub Capital BDC and Diamond Hill Investment, you can compare the effects of market volatilities on Golub Capital 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 Golub Capital with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golub Capital and Diamond Hill.
Diversification Opportunities for Golub Capital and Diamond Hill
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Golub and Diamond is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC 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 Golub Capital 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 Golub Capital BDC 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 Golub Capital i.e., Golub Capital and Diamond Hill go up and down completely randomly.
Pair Corralation between Golub Capital and Diamond Hill
Given the investment horizon of 90 days Golub Capital BDC is expected to generate 0.8 times more return on investment than Diamond Hill. However, Golub Capital BDC is 1.26 times less risky than Diamond Hill. It trades about 0.27 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.06 per unit of risk. If you would invest 1,628 in Golub Capital BDC on January 26, 2024 and sell it today you would earn a total of 79.00 from holding Golub Capital BDC or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golub Capital BDC vs. Diamond Hill Investment
Performance |
| Timeline |
| Golub Capital BDC |
| Diamond Hill Investment |
Golub Capital and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golub Capital and Diamond Hill
The main advantage of trading using opposite Golub Capital and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golub Capital 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.| Golub Capital vs. Federated Premier Municipal | Golub Capital vs. Blackrock Muniyield | Golub Capital vs. NXG NextGen Infrastructure | Golub Capital vs. Brightsphere Investment Group |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Brightsphere Investment Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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