Correlation Between Bank of New York and Diamond Hill

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Can any of the company-specific risk be diversified away by investing in both Bank of New York 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 Bank of New York and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Of New and Diamond Hill Inv, you can compare the effects of market volatilities on Bank of New York 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 Bank of New York with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Diamond Hill.

Diversification Opportunities for Bank of New York and Diamond Hill

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Bank of New York and Diamond is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of New and Diamond Hill Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Inv and Bank of New York 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 Bank Of New 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 Inv has no effect on the direction of Bank of New York i.e., Bank of New York and Diamond Hill go up and down completely randomly.

Pair Corralation between Bank of New York and Diamond Hill

Allowing for the 90-day total investment horizon Bank of New York is expected to generate 2.37 times less return on investment than Diamond Hill. In addition to that, Bank of New York is 1.03 times more volatile than Diamond Hill Inv. It trades about 0.03 of its total potential returns per unit of risk. Diamond Hill Inv is currently generating about 0.07 per unit of volatility. If you would invest  9,969  in Diamond Hill Inv on April 6, 2022 and sell it today you would earn a total of  7,695  from holding Diamond Hill Inv or generate 77.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Bank Of New  vs.  Diamond Hill Inv

 Performance (%) 
      Timeline 
Bank of New York 
Bank of New York Performance
0 of 100
Over the last 90 days Bank Of New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0321
Payout Ratio
0.33
Last Split Factor
9434:10000
Forward Annual Dividend Rate
1.36
Dividend Date
2022-05-11
Ex Dividend Date
2022-04-27
Last Split Date
2007-07-02

Bank of New York Price Channel

Diamond Hill Inv 
Diamond Performance
0 of 100
Over the last 90 days Diamond Hill Inv has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward indicators, Diamond Hill is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0341
Payout Ratio
0.98
Last Split Factor
1:5
Forward Annual Dividend Rate
6.0
Dividend Date
2022-06-17
Ex Dividend Date
2022-06-01
Last Split Date
2001-09-26

Diamond Price Channel

Bank of New York and Diamond Hill Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Bank of New York and Diamond Hill

The main advantage of trading using opposite Bank of New York and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York 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 Bank Of New and Diamond Hill Inv 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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