Correlation Between Diamond Hill and Boston Partners

Can any of the company-specific risk be diversified away by investing in both Diamond Hill and Boston Partners 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 Boston Partners 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 Boston Partners Longshort, you can compare the effects of market volatilities on Diamond Hill and Boston Partners 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 Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Boston Partners.

Diversification Opportunities for Diamond Hill and Boston Partners

0.03

Correlation Coefficient

Diamond Hill  Boston Partners

Significant diversification

The 3 months correlation between Diamond and Boston is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Boston Partners Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Longshort 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 Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners Longshort has no effect on the direction of Diamond Hill i.e., Diamond Hill and Boston Partners go up and down completely randomly.

Pair Corralation between Diamond Hill and Boston Partners

Assuming the 90 days horizon Diamond Hill Long Short is expected to under-perform the Boston Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, Diamond Hill Long Short is 1.18 times less risky than Boston Partners. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Boston Partners Longshort is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,176  in Boston Partners Longshort on September 3, 2024 and sell it today you would earn a total of  55.00  from holding Boston Partners Longshort or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Diamond Hill Long Short  vs.  Boston Partners Longshort

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 fairly strong primary indicators, Diamond Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Partners Longshort

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Partners Longshort are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Boston Partners 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 Boston Partners

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

The idea behind Diamond Hill Long Short and Boston Partners Longshort 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.