Correlation Between American Funds and Davis Global

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

By analyzing existing cross correlation between American Funds Capital and Davis Global Fund, you can compare the effects of market volatilities on American Funds and Davis Global 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 American Funds with a short position of Davis Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Davis Global.

Diversification Opportunities for American Funds and Davis Global

0.98

Correlation Coefficient

American Funds  Davis Global

Almost no diversification

The 3 months correlation between American and Davis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Davis Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Global and American Funds 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 American Funds Capital are associated (or correlated) with Davis Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Global has no effect on the direction of American Funds i.e., American Funds and Davis Global go up and down completely randomly.

Pair Corralation between American Funds and Davis Global

Assuming the 90 days horizon American Funds Capital is expected to generate 0.69 times more return on investment than Davis Global. However, American Funds Capital is 1.45 times less risky than Davis Global. It trades about 0.22 of its potential returns per unit of risk. Davis Global Fund is currently generating about 0.14 per unit of risk. If you would invest  6,453  in American Funds Capital on May 6, 2025 and sell it today you would earn a total of  565.00  from holding American Funds Capital or generate 8.76% return on investment over 90 days.

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

American Funds Capital  vs.  Davis Global Fund

American Funds Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Capital are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Davis Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Global Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Davis Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with American Funds and Davis Global

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

The idea behind American Funds Capital and Davis Global 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.