Correlation Between Diamond Hill and Salient Tactical

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

By analyzing existing cross correlation between Diamond Hill Long Short and Salient Tactical Growth, you can compare the effects of market volatilities on Diamond Hill and Salient Tactical 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 Salient Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Salient Tactical.

Diversification Opportunities for Diamond Hill and Salient Tactical

-0.13

Correlation Coefficient

Diamond Hill  Salient Tactical

Good diversification

The 3 months correlation between Diamond and Salient is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Long Short and Salient Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Tactical Growth 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 Long Short are associated (or correlated) with Salient Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Tactical Growth has no effect on the direction of Diamond Hill i.e., Diamond Hill and Salient Tactical go up and down completely randomly.

Pair Corralation between Diamond Hill and Salient Tactical

Assuming the 90 days horizon Diamond Hill Long Short is expected to under-perform the Salient Tactical. In addition to that, Diamond Hill is 2.34 times more volatile than Salient Tactical Growth. It trades about -0.22 of its total potential returns per unit of risk. Salient Tactical Growth is currently generating about -0.17 per unit of volatility. If you would invest  2,812  in Salient Tactical Growth on October 1, 2024 and sell it today you would lose (60.00) from holding Salient Tactical Growth or give up 2.13% of portfolio value over 90 days.

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

Diamond Hill Long Short  vs.  Salient Tactical Growth

Diamond Hill Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Salient Tactical Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Tactical Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Salient Tactical 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 Salient Tactical

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

The idea behind Diamond Hill Long Short and Salient Tactical Growth 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..