Correlation Between Davis Financial and Dynamic Total

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

Diversification Opportunities for Davis Financial and Dynamic Total

0.65

Correlation Coefficient

Davis Financial  Dynamic Total

Poor diversification

The 3 months correlation between Davis and Dynamic is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Dynamic Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Total Return 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 Dynamic Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Total Return has no effect on the direction of Davis Financial i.e., Davis Financial and Dynamic Total go up and down completely randomly.

Pair Corralation between Davis Financial and Dynamic Total

Assuming the 90 days horizon Davis Financial is expected to generate 1.98 times less return on investment than Dynamic Total. In addition to that, Davis Financial is 5.23 times more volatile than Dynamic Total Return. It trades about 0.02 of its total potential returns per unit of risk. Dynamic Total Return is currently generating about 0.23 per unit of volatility. If you would invest  1,387  in Dynamic Total Return on July 21, 2025 and sell it today you would earn a total of  34.00  from holding Dynamic Total Return or generate 2.45% return on investment over 90 days.

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

Davis Financial Fund  vs.  Dynamic Total Return

Davis Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Financial Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Davis Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dynamic Total Return

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Total Return are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dynamic Total 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 Dynamic Total

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

The idea behind Davis Financial Fund and Dynamic Total Return 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.