Correlation Between Davis Financial and Aberden Emerng
Can any of the company-specific risk be diversified away by investing in both Davis Financial and Aberden Emerng 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 Aberden Emerng 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 Aberden Emerng Mrkts, you can compare the effects of market volatilities on Davis Financial and Aberden Emerng 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 Aberden Emerng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Aberden Emerng.
Diversification Opportunities for Davis Financial and Aberden Emerng
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Davis and Aberden is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Aberden Emerng Mrkts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberden Emerng Mrkts 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 Aberden Emerng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberden Emerng Mrkts has no effect on the direction of Davis Financial i.e., Davis Financial and Aberden Emerng go up and down completely randomly.
Pair Corralation between Davis Financial and Aberden Emerng
Assuming the 90 days horizon Davis Financial is expected to generate 1.1 times less return on investment than Aberden Emerng. But when comparing it to its historical volatility, Davis Financial Fund is 1.06 times less risky than Aberden Emerng. It trades about 0.09 of its potential returns per unit of risk. Aberden Emerng Mrkts is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,661 in Aberden Emerng Mrkts on September 11, 2025 and sell it today you would earn a total of 92.00 from holding Aberden Emerng Mrkts or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Davis Financial Fund vs. Aberden Emerng Mrkts
Performance |
| Timeline |
| Davis Financial |
| Aberden Emerng Mrkts |
Davis Financial and Aberden Emerng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Aberden Emerng
The main advantage of trading using opposite Davis Financial and Aberden Emerng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Aberden Emerng 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 Aberden Emerng will offset losses from the drop in Aberden Emerng's long position.| Davis Financial vs. Davis International Fund | Davis Financial vs. Davis International Fund | Davis Financial vs. Davis Financial Fund | Davis Financial vs. Davis Appreciation Income |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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