Correlation Between Davis International and Us Strategic

Can any of the company-specific risk be diversified away by investing in both Davis International and Us Strategic 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 Davis International and Us Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Davis International Fund and Us Strategic Equity, you can compare the effects of market volatilities on Davis International and Us Strategic 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 Davis International with a short position of Us Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis International and Us Strategic.

Diversification Opportunities for Davis International and Us Strategic

-0.01

Correlation Coefficient

Davis International  Us Strategic

Good diversification

The 3 months correlation between Davis and RUSTX is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Davis International Fund and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity and Davis International 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 Davis International Fund are associated (or correlated) with Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of Davis International i.e., Davis International and Us Strategic go up and down completely randomly.

Pair Corralation between Davis International and Us Strategic

Assuming the 90 days horizon Davis International Fund is expected to generate 1.01 times more return on investment than Us Strategic. However, Davis International is 1.01 times more volatile than Us Strategic Equity. It trades about 0.0 of its potential returns per unit of risk. Us Strategic Equity is currently generating about -0.05 per unit of risk. If you would invest  1,324  in Davis International Fund on September 25, 2024 and sell it today you would lose (11.00) from holding Davis International Fund or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Davis International Fund  vs.  Us Strategic Equity

Davis International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Davis International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Strategic Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Strategic Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Us Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davis International and Us Strategic

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

The idea behind Davis International Fund and Us Strategic Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.