Correlation Between Delaware Reit and Optimum Small

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

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

Diversification Opportunities for Delaware Reit and Optimum Small

0.79

Correlation Coefficient

Delaware Reit  Optimum Small

Poor diversification

The 3 months correlation between Delaware and Optimum is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Reit Fund and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and Delaware Reit 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 Reit Fund are associated (or correlated) with Optimum Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Delaware Reit i.e., Delaware Reit and Optimum Small go up and down completely randomly.

Pair Corralation between Delaware Reit and Optimum Small

Assuming the 90 days horizon Delaware Reit Fund is expected to generate 0.45 times more return on investment than Optimum Small. However, Delaware Reit Fund is 2.24 times less risky than Optimum Small. It trades about -0.08 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about -0.23 per unit of risk. If you would invest  1,239  in Delaware Reit Fund on December 4, 2024 and sell it today you would lose (33.00) from holding Delaware Reit Fund or give up 2.66% of portfolio value over 90 days.

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

Delaware Reit Fund  vs.  Optimum Small Mid Cap

Delaware Reit

Risk-Adjusted Performance

Very Weak

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

Optimum Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimum Small Mid Cap 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 Reit and Optimum Small

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

The idea behind Delaware Reit Fund and Optimum Small Mid 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.