Correlation Between Diamond Hill and Blackstone

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

Diversification Opportunities for Diamond Hill and Blackstone

0.53

Correlation Coefficient

Diamond Hill  Blackstone

Very weak diversification

The 3 months correlation between Diamond and Blackstone is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group 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 Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of Diamond Hill i.e., Diamond Hill and Blackstone go up and down completely randomly.

Pair Corralation between Diamond Hill and Blackstone

Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Blackstone. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Hill Investment is 1.34 times less risky than Blackstone. The stock trades about 0.0 of its potential returns per unit of risk. The Blackstone Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,007  in Blackstone Group on January 3, 2025 and sell it today you would earn a total of  6,759  from holding Blackstone Group or generate 84.41% return on investment over 90 days.

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

Diamond Hill Investment  vs.  Blackstone Group

Diamond Hill Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Blackstone Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Diamond Hill and Blackstone

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

The idea behind Diamond Hill Investment and Blackstone Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.