Correlation Between Diamond Hill and Integrated Wellness

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

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

Diversification Opportunities for Diamond Hill and Integrated Wellness

0.48

Correlation Coefficient

Diamond Hill  Integrated Wellness

Very weak diversification

The 3 months correlation between Diamond and Integrated is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Integrated Wellness Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Wellness 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 Investment are associated (or correlated) with Integrated Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Wellness has no effect on the direction of Diamond Hill i.e., Diamond Hill and Integrated Wellness go up and down completely randomly.

Pair Corralation between Diamond Hill and Integrated Wellness

Given the investment horizon of 90 days Diamond Hill Investment is expected to generate 8.27 times more return on investment than Integrated Wellness. However, Diamond Hill is 8.27 times more volatile than Integrated Wellness Acquisition. It trades about 0.09 of its potential returns per unit of risk. Integrated Wellness Acquisition is currently generating about 0.15 per unit of risk. If you would invest  15,439  in Diamond Hill Investment on September 4, 2024 and sell it today you would earn a total of  1,401  from holding Diamond Hill Investment or generate 9.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Diamond Hill Investment  vs.  Integrated Wellness Acquisitio

Diamond Hill Investment

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Diamond Hill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Integrated Wellness

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Wellness Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Integrated Wellness is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Diamond Hill and Integrated Wellness

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

The idea behind Diamond Hill Investment and Integrated Wellness Acquisition 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.