There was a feud between Magennis and O'Neill. Princess Ellen, Red Hugh O'Neill's daughter, loved Magennis. She disappeared when she was to wed old Earl James. After three years Magennis went to consult a holy hermit living on Cave Hill. It was Ellen.
The Diamond, though in the title, is never mentioned in the text; I suppose we are to take Princess Ellen as the diamond of the title. See "Belfast Mountains (The Diamonds of Derry)" for the background for the Cavehill Diamond. - BS
For Red Hugh O'Neill, see the notes to "O'Donnell Aboo (The Clanconnell War Song)." This seems to be the only song linking the O'Neills to the Cavehill Diamond. - RBW