Correlation Between Diamond Hill and First Trust

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

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

Diversification Opportunities for Diamond Hill and First Trust

0.0

Correlation Coefficient

Diamond Hill  First Trust

Pay attention - limited upside

The 3 months correlation between Diamond and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Funds and First Trust India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust India 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 Funds are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust India has no effect on the direction of Diamond Hill i.e., Diamond Hill and First Trust go up and down completely randomly.

Pair Corralation between Diamond Hill and First Trust

If you would invest (100.00) in First Trust India on August 30, 2025 and sell it today you would earn a total of  100.00  from holding First Trust India or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Diamond Hill Funds  vs.  First Trust India

Diamond Hill Funds

Risk-Adjusted Performance

Weakest

Over the last 90 days Diamond Hill Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Diamond Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust India

Risk-Adjusted Performance

Mild

Over the last 90 days First Trust India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, First Trust 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 First Trust

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

The idea behind Diamond Hill Funds and First Trust India 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.