Correlation Between Diamond Hill and Copeland Smid

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

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

Diversification Opportunities for Diamond Hill and Copeland Smid

0.93

Correlation Coefficient

Diamond Hill  Copeland Smid

Almost no diversification

The 3 months correlation between Diamond and Copeland is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Small and Copeland Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copeland Smid Cap 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 Small are associated (or correlated) with Copeland Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copeland Smid Cap has no effect on the direction of Diamond Hill i.e., Diamond Hill and Copeland Smid go up and down completely randomly.

Pair Corralation between Diamond Hill and Copeland Smid

Assuming the 90 days horizon Diamond Hill Small is expected to generate 1.33 times more return on investment than Copeland Smid. However, Diamond Hill is 1.33 times more volatile than Copeland Smid Cap. It trades about 0.23 of its potential returns per unit of risk. Copeland Smid Cap is currently generating about 0.16 per unit of risk. If you would invest  2,058  in Diamond Hill Small on May 1, 2025 and sell it today you would earn a total of  413.00  from holding Diamond Hill Small or generate 20.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Diamond Hill Small  vs.  Copeland Smid Cap

Diamond Hill Small

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Small are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Diamond Hill showed solid returns over the last few months and may actually be approaching a breakup point.

Copeland Smid Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Copeland Smid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Copeland Smid may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Diamond Hill and Copeland Smid

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

The idea behind Diamond Hill Small and Copeland Smid Cap 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.