Correlation Between Davis Financial and Sit Small
Can any of the company-specific risk be diversified away by investing in both Davis Financial and Sit Small 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 Sit Small 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 Sit Small Cap, you can compare the effects of market volatilities on Davis Financial and Sit Small 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 Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Sit Small.
Diversification Opportunities for Davis Financial and Sit Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Davis and Sit is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Small Cap 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 Sit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of Davis Financial i.e., Davis Financial and Sit Small go up and down completely randomly.
Pair Corralation between Davis Financial and Sit Small
Assuming the 90 days horizon Davis Financial Fund is expected to generate 1.11 times more return on investment than Sit Small. However, Davis Financial is 1.11 times more volatile than Sit Small Cap. It trades about 0.34 of its potential returns per unit of risk. Sit Small Cap is currently generating about 0.23 per unit of risk. If you would invest 6,393 in Davis Financial Fund on September 3, 2024 and sell it today you would earn a total of 686.00 from holding Davis Financial Fund or generate 10.73% 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. Sit Small Cap
Performance |
| Timeline |
| Davis Financial |
| Sit Small Cap |
Davis Financial and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Sit Small
The main advantage of trading using opposite Davis Financial and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Sit Small 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 Sit Small will offset losses from the drop in Sit Small's long position.| Davis Financial vs. The Gabelli Small | Davis Financial vs. Northern Small Cap | Davis Financial vs. Pgim Jennison Diversified | Davis Financial vs. Fuller Thaler Behavioral |
| Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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