Correlation Between Classic Value and Delaware Investments

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

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

Diversification Opportunities for Classic Value and Delaware Investments

-0.71

Correlation Coefficient

Classic Value  Delaware Investments

Pay attention - limited upside

The 3 months correlation between Classic and Delaware is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Classic Value Fund and Delaware Investments Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Investments and Classic Value 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 Classic Value Fund are associated (or correlated) with Delaware Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Investments has no effect on the direction of Classic Value i.e., Classic Value and Delaware Investments go up and down completely randomly.

Pair Corralation between Classic Value and Delaware Investments

Assuming the 90 days horizon Classic Value Fund is expected to under-perform the Delaware Investments. In addition to that, Classic Value is 55.92 times more volatile than Delaware Investments Ultrashort. It trades about -0.14 of its total potential returns per unit of risk. Delaware Investments Ultrashort is currently generating about 0.21 per unit of volatility. If you would invest  988.00  in Delaware Investments Ultrashort on December 4, 2024 and sell it today you would earn a total of  9.00  from holding Delaware Investments Ultrashort or generate 0.91% return on investment over 90 days.

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

Classic Value Fund  vs.  Delaware Investments Ultrashor

Classic Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Classic Value 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Delaware Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Investments Ultrashort 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 Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Classic Value and Delaware Investments

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

The idea behind Classic Value Fund and Delaware Investments Ultrashort 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..