Correlation Between Peoples Fin and Diamond Hill

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

By analyzing existing cross correlation between Peoples Fin and Diamond Hill Investment, you can compare the effects of market volatilities on Peoples Fin and Diamond Hill 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 Peoples Fin with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Fin and Diamond Hill.

Diversification Opportunities for Peoples Fin and Diamond Hill

0.94

Correlation Coefficient

Peoples Fin  Diamond Hill

Almost no diversification

The 3 months correlation between Peoples and Diamond is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Fin and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Peoples Fin 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 Peoples Fin are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Peoples Fin i.e., Peoples Fin and Diamond Hill go up and down completely randomly.

Pair Corralation between Peoples Fin and Diamond Hill

Given the investment horizon of 90 days Peoples Fin is expected to generate 1.43 times more return on investment than Diamond Hill. However, Peoples Fin is 1.43 times more volatile than Diamond Hill Investment. It trades about 0.02 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.01 per unit of risk. If you would invest  4,167  in Peoples Fin on May 6, 2025 and sell it today you would earn a total of  651.00  from holding Peoples Fin or generate 15.62% return on investment over 90 days.

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

Peoples Fin  vs.  Diamond Hill Investment

Peoples Fin

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Fin are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Peoples Fin may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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.

Pair Trading with Peoples Fin and Diamond Hill

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

The idea behind Peoples Fin and Diamond Hill Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.