Correlation Between Delaware Healthcare and Vanguard Total

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

Diversification Opportunities for Delaware Healthcare and Vanguard Total

-0.43

Correlation Coefficient

Delaware Healthcare  Vanguard Total

Very good diversification

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

Pair Corralation between Delaware Healthcare and Vanguard Total

Assuming the 90 days horizon Delaware Healthcare Fund is expected to under-perform the Vanguard Total. In addition to that, Delaware Healthcare is 1.2 times more volatile than Vanguard Total Stock. It trades about 0.0 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.1 per unit of volatility. If you would invest  9,687  in Vanguard Total Stock on October 22, 2024 and sell it today you would earn a total of  4,729  from holding Vanguard Total Stock or generate 48.82% return on investment over 90 days.

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

Delaware Healthcare Fund  vs.  Vanguard Total Stock

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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Total Stock

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Vanguard Total 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 Healthcare and Vanguard Total

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

The idea behind Delaware Healthcare Fund and Vanguard Total Stock 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.