Correlation Between Delaware Value and Delaware National

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

By analyzing existing cross correlation between Delaware Value Fund and Delaware National Municipal, you can compare the effects of market volatilities on Delaware Value and Delaware National 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 Delaware Value with a short position of Delaware National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delaware Value and Delaware National.

Diversification Opportunities for Delaware Value and Delaware National

0.43

Correlation Coefficient

Delaware Value  Delaware National

Very weak diversification

The 3 months correlation between Delaware and Delaware is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Value Fund and Delaware National Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware National and Delaware Value 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 Delaware Value Fund are associated (or correlated) with Delaware National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware National has no effect on the direction of Delaware Value i.e., Delaware Value and Delaware National go up and down completely randomly.

Pair Corralation between Delaware Value and Delaware National

Assuming the 90 days horizon Delaware Value Fund is expected to generate 1.38 times more return on investment than Delaware National. However, Delaware Value is 1.38 times more volatile than Delaware National Municipal. It trades about -0.02 of its potential returns per unit of risk. Delaware National Municipal is currently generating about -0.1 per unit of risk. If you would invest  1,363  in Delaware Value Fund on December 31, 2024 and sell it today you would lose (15.00) from holding Delaware Value Fund or give up 1.1% of portfolio value over 90 days.

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

Delaware Value Fund  vs.  Delaware National Municipal

Delaware Value

Risk-Adjusted Performance

Very Weak

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

Delaware National

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Delaware Value and Delaware National

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

The idea behind Delaware Value Fund and Delaware National Municipal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.