Correlation Between Valic Company and Davis Financial
Can any of the company-specific risk be diversified away by investing in both Valic Company and Davis Financial 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 Valic Company and Davis Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Davis Financial Fund, you can compare the effects of market volatilities on Valic Company and Davis Financial 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 Valic Company with a short position of Davis Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Davis Financial.
Diversification Opportunities for Valic Company and Davis Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valic and Davis is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Davis Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Financial and Valic Company 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 Valic Company I are associated (or correlated) with Davis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Financial has no effect on the direction of Valic Company i.e., Valic Company and Davis Financial go up and down completely randomly.
Pair Corralation between Valic Company and Davis Financial
Assuming the 90 days horizon Valic Company is expected to generate 1.29 times less return on investment than Davis Financial. In addition to that, Valic Company is 1.24 times more volatile than Davis Financial Fund. It trades about 0.07 of its total potential returns per unit of risk. Davis Financial Fund is currently generating about 0.11 per unit of volatility. If you would invest 3,768 in Davis Financial Fund on September 12, 2024 and sell it today you would earn a total of 1,510 from holding Davis Financial Fund or generate 40.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Davis Financial Fund
Performance |
| Timeline |
| Valic Company I |
| Davis Financial |
Valic Company and Davis Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Davis Financial
The main advantage of trading using opposite Valic Company and Davis Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Davis Financial 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 Financial will offset losses from the drop in Davis Financial's long position.| Valic Company vs. Vanguard Small Cap Value | Valic Company vs. Vanguard Small Cap Value | Valic Company vs. Us Small Cap | Valic Company vs. Us Targeted Value |
| Davis Financial vs. Valic Company I | Davis Financial vs. Ab Discovery Value | Davis Financial vs. Applied Finance Explorer | Davis Financial vs. Lsv Small Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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