Correlation Between Litman Gregory and Davis Select
Can any of the company-specific risk be diversified away by investing in both Litman Gregory and Davis Select 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 Litman Gregory and Davis Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Funds and Davis Select International, you can compare the effects of market volatilities on Litman Gregory and Davis Select 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 Litman Gregory with a short position of Davis Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Davis Select.
Diversification Opportunities for Litman Gregory and Davis Select
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Litman and Davis is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds and Davis Select International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Select Interna and Litman Gregory 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 Litman Gregory Funds are associated (or correlated) with Davis Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Select Interna has no effect on the direction of Litman Gregory i.e., Litman Gregory and Davis Select go up and down completely randomly.
Pair Corralation between Litman Gregory and Davis Select
Given the investment horizon of 90 days Litman Gregory Funds is expected to generate 0.52 times more return on investment than Davis Select. However, Litman Gregory Funds is 1.93 times less risky than Davis Select. It trades about 0.26 of its potential returns per unit of risk. Davis Select International is currently generating about -0.08 per unit of risk. If you would invest 932.00 in Litman Gregory Funds on September 4, 2024 and sell it today you would earn a total of 41.00 from holding Litman Gregory Funds or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litman Gregory Funds vs. Davis Select International
Performance |
| Timeline |
| Litman Gregory Funds |
| Davis Select Interna |
Litman Gregory and Davis Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and Davis Select
The main advantage of trading using opposite Litman Gregory and Davis Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory position performs unexpectedly, Davis Select 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 Davis Select will offset losses from the drop in Davis Select's long position.| Litman Gregory vs. FT Vest Equity | Litman Gregory vs. Northern Lights | Litman Gregory vs. Dimensional International High | Litman Gregory vs. JPMorgan Fundamental Data |
| Davis Select vs. Davis Select Worldwide | Davis Select vs. Davis Select Financial | Davis Select vs. First Trust Dorsey |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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