Correlation Between Delaware Healthcare and Aqr Large

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

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

Diversification Opportunities for Delaware Healthcare and Aqr Large

-0.7

Correlation Coefficient

Delaware Healthcare  Aqr Large

Excellent diversification

The 3 months correlation between Delaware and Aqr is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Healthcare Fund and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and Delaware Healthcare 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 Healthcare Fund are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Delaware Healthcare i.e., Delaware Healthcare and Aqr Large go up and down completely randomly.

Pair Corralation between Delaware Healthcare and Aqr Large

Assuming the 90 days horizon Delaware Healthcare Fund is expected to under-perform the Aqr Large. In addition to that, Delaware Healthcare is 1.06 times more volatile than Aqr Large Cap. It trades about -0.09 of its total potential returns per unit of risk. Aqr Large Cap is currently generating about 0.22 per unit of volatility. If you would invest  2,444  in Aqr Large Cap on August 31, 2024 and sell it today you would earn a total of  126.00  from holding Aqr Large Cap or generate 5.16% return on investment over 90 days.

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

Delaware Healthcare Fund  vs.  Aqr Large Cap

Delaware Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aqr Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Aqr Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delaware Healthcare and Aqr Large

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

The idea behind Delaware Healthcare Fund and Aqr Large Cap 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.