Correlation Between Davis Financial and Ivy Value

Can any of the company-specific risk be diversified away by investing in both Davis Financial and Ivy Value 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 Ivy Value 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 Ivy Value Fund, you can compare the effects of market volatilities on Davis Financial and Ivy Value 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 Ivy Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Ivy Value.

Diversification Opportunities for Davis Financial and Ivy Value

-0.49

Correlation Coefficient

Davis Financial  Ivy Value

Very good diversification

The 3 months correlation between Davis and Ivy is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Ivy Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Value Fund 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 Ivy Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Value Fund has no effect on the direction of Davis Financial i.e., Davis Financial and Ivy Value go up and down completely randomly.

Pair Corralation between Davis Financial and Ivy Value

If you would invest  1,790  in Ivy Value Fund on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Ivy Value Fund or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

Davis Financial Fund  vs.  Ivy Value Fund

Davis Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Financial Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Davis Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ivy Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Ivy Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davis Financial and Ivy Value

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

The idea behind Davis Financial Fund and Ivy Value Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.