Correlation Between Delaware Small and Delaware Value

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

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

Diversification Opportunities for Delaware Small and Delaware Value

0.87

Correlation Coefficient

Delaware Small  Delaware Value

Very poor diversification

The 3 months correlation between Delaware and Delaware is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Small Cap and Delaware Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Value and Delaware Small 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 Small Cap are associated (or correlated) with Delaware Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Value has no effect on the direction of Delaware Small i.e., Delaware Small and Delaware Value go up and down completely randomly.

Pair Corralation between Delaware Small and Delaware Value

Assuming the 90 days horizon Delaware Small Cap is expected to generate 1.84 times more return on investment than Delaware Value. However, Delaware Small is 1.84 times more volatile than Delaware Value Fund. It trades about 0.12 of its potential returns per unit of risk. Delaware Value Fund is currently generating about 0.04 per unit of risk. If you would invest  7,044  in Delaware Small Cap on September 13, 2024 and sell it today you would earn a total of  656.00  from holding Delaware Small Cap or generate 9.31% return on investment over 90 days.

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

Delaware Small Cap  vs.  Delaware Value Fund

Delaware Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Delaware Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Delaware Value

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Value Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Delaware Value 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 Small and Delaware Value

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

The idea behind Delaware Small Cap and Delaware Value 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.