Correlation Between Davis Financial and Thornburg Core
Can any of the company-specific risk be diversified away by investing in both Davis Financial and Thornburg Core 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 Financial and Thornburg Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Thornburg E Growth, you can compare the effects of market volatilities on Davis Financial and Thornburg Core 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 Financial with a short position of Thornburg Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Thornburg Core.
Diversification Opportunities for Davis Financial and Thornburg Core
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Davis and Thornburg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Thornburg E Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg E Growth and Davis Financial 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 Financial Fund are associated (or correlated) with Thornburg Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg E Growth has no effect on the direction of Davis Financial i.e., Davis Financial and Thornburg Core go up and down completely randomly.
Pair Corralation between Davis Financial and Thornburg Core
Assuming the 90 days horizon Davis Financial Fund is expected to generate 1.01 times more return on investment than Thornburg Core. However, Davis Financial is 1.01 times more volatile than Thornburg E Growth. It trades about 0.34 of its potential returns per unit of risk. Thornburg E Growth is currently generating about 0.31 per unit of risk. If you would invest 6,669 in Davis Financial Fund on September 3, 2024 and sell it today you would earn a total of 717.00 from holding Davis Financial Fund or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Financial Fund vs. Thornburg E Growth
Performance |
| Timeline |
| Davis Financial |
| Thornburg E Growth |
Davis Financial and Thornburg Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Thornburg Core
The main advantage of trading using opposite Davis Financial and Thornburg Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Thornburg Core 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 Thornburg Core will offset losses from the drop in Thornburg Core's long position.| Davis Financial vs. Elfun Government Money | Davis Financial vs. Matson Money Equity | Davis Financial vs. Dws Government Money | Davis Financial vs. Janus Investment |
| Thornburg Core vs. Lord Abbett Emerging | Thornburg Core vs. Aig Government Money | Thornburg Core vs. Ashmore Emerging Markets | Thornburg Core vs. General Money Market |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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