Correlation Between Delaware Limited-term and Performance Trust

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

By analyzing existing cross correlation between Delaware Limited Term Diversified and Performance Trust Strategic, you can compare the effects of market volatilities on Delaware Limited-term and Performance Trust 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 Limited-term with a short position of Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delaware Limited-term and Performance Trust.

Diversification Opportunities for Delaware Limited-term and Performance Trust

0.92

Correlation Coefficient

Delaware Limited-term  Performance Trust

Almost no diversification

The 3 months correlation between Delaware and Performance is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Limited Term Diversif and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust and Delaware Limited-term 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 Limited Term Diversified are associated (or correlated) with Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Delaware Limited-term i.e., Delaware Limited-term and Performance Trust go up and down completely randomly.

Pair Corralation between Delaware Limited-term and Performance Trust

Assuming the 90 days horizon Delaware Limited-term is expected to generate 1.41 times less return on investment than Performance Trust. But when comparing it to its historical volatility, Delaware Limited Term Diversified is 2.44 times less risky than Performance Trust. It trades about 0.2 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,940  in Performance Trust Strategic on December 23, 2024 and sell it today you would earn a total of  42.00  from holding Performance Trust Strategic or generate 2.16% return on investment over 90 days.

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

Delaware Limited Term Diversif  vs.  Performance Trust Strategic

Delaware Limited Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Limited Term Diversified are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Delaware Limited-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Performance Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Trust Strategic are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Performance Trust 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 Limited-term and Performance Trust

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

The idea behind Delaware Limited Term Diversified and Performance Trust Strategic 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.