Correlation Between Davis Select and Dimensional ETF

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

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

Diversification Opportunities for Davis Select and Dimensional ETF

0.15

Correlation Coefficient

Davis Select  Dimensional ETF

Average diversification

The 3 months correlation between Davis and Dimensional is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Davis Select International and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and Davis Select 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 Select International are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Davis Select i.e., Davis Select and Dimensional ETF go up and down completely randomly.

Pair Corralation between Davis Select and Dimensional ETF

Given the investment horizon of 90 days Davis Select International is expected to generate 2.1 times more return on investment than Dimensional ETF. However, Davis Select is 2.1 times more volatile than Dimensional ETF Trust. It trades about 0.13 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.0 per unit of risk. If you would invest  2,075  in Davis Select International on September 12, 2024 and sell it today you would earn a total of  311.00  from holding Davis Select International or generate 14.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Davis Select International  vs.  Dimensional ETF Trust

Davis Select Interna

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Select International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Davis Select unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dimensional ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Davis Select and Dimensional ETF

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

The idea behind Davis Select International and Dimensional ETF Trust 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.