Correlation Between Davis Select and WisdomTree International

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

Diversification Opportunities for Davis Select and WisdomTree International

0.27

Correlation Coefficient

Davis Select  WisdomTree International

Modest diversification

The 3 months correlation between Davis and WisdomTree is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Davis Select International and WisdomTree International Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Davis Select i.e., Davis Select and WisdomTree International go up and down completely randomly.

Pair Corralation between Davis Select and WisdomTree International

Given the investment horizon of 90 days Davis Select International is expected to under-perform the WisdomTree International. In addition to that, Davis Select is 1.32 times more volatile than WisdomTree International Multifactor. It trades about -0.1 of its total potential returns per unit of risk. WisdomTree International Multifactor is currently generating about -0.04 per unit of volatility. If you would invest  3,246  in WisdomTree International Multifactor on September 10, 2025 and sell it today you would lose (22.00) from holding WisdomTree International Multifactor or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Davis Select International  vs.  WisdomTree International Multi

Davis Select Interna

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Select International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Davis Select is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Multifactor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Davis Select and WisdomTree International

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

The idea behind Davis Select International and WisdomTree International Multifactor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.