Correlation Between Diamond Hill and Federated Investors

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

Diversification Opportunities for Diamond Hill and Federated Investors

0.67

Correlation Coefficient

Diamond Hill  Federated Investors

Poor diversification

The 3 months correlation between Diamond and Federated is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors 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 Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of Diamond Hill i.e., Diamond Hill and Federated Investors go up and down completely randomly.

Pair Corralation between Diamond Hill and Federated Investors

Given the investment horizon of 90 days Diamond Hill is expected to generate 3.68 times less return on investment than Federated Investors. In addition to that, Diamond Hill is 1.74 times more volatile than Federated Investors B. It trades about 0.05 of its total potential returns per unit of risk. Federated Investors B is currently generating about 0.32 per unit of volatility. If you would invest  4,164  in Federated Investors B on May 6, 2025 and sell it today you would earn a total of  940.00  from holding Federated Investors B or generate 22.57% return on investment over 90 days.

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

Diamond Hill Investment  vs.  Federated Investors B

Diamond Hill Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Federated Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Hill and Federated Investors

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

The idea behind Diamond Hill Investment and Federated Investors B 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.