Correlation Between Delaware Healthcare and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Delaware Healthcare and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Mid, you can compare the effects of market volatilities on Delaware Healthcare and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delaware Healthcare and Goldman Sachs.

Diversification Opportunities for Delaware Healthcare and Goldman Sachs

0.47

Correlation Coefficient

Delaware Healthcare  Goldman Sachs

Very weak diversification

The 3 months correlation between Delaware and Goldman is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Healthcare Fund and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Mid has no effect on the direction of Delaware Healthcare i.e., Delaware Healthcare and Goldman Sachs go up and down completely randomly.

Pair Corralation between Delaware Healthcare and Goldman Sachs

Assuming the 90 days horizon Delaware Healthcare is expected to generate 1.69 times less return on investment than Goldman Sachs. In addition to that, Delaware Healthcare is 1.05 times more volatile than Goldman Sachs Mid. It trades about 0.02 of its total potential returns per unit of risk. Goldman Sachs Mid is currently generating about 0.04 per unit of volatility. If you would invest  2,925  in Goldman Sachs Mid on December 2, 2024 and sell it today you would earn a total of  448.00  from holding Goldman Sachs Mid or generate 15.32% return on investment over 90 days.

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

Delaware Healthcare Fund  vs.  Goldman Sachs Mid

Delaware Healthcare

Risk-Adjusted Performance

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Goldman Sachs Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Delaware Healthcare and Goldman Sachs

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

The idea behind Delaware Healthcare Fund and Goldman Sachs Mid 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.