Correlation Between M Large and Delaware Healthcare

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

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

Diversification Opportunities for M Large and Delaware Healthcare

-0.22

Correlation Coefficient

M Large  Delaware Healthcare

Very good diversification

The 3 months correlation between MTCGX and Delaware is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Delaware Healthcare Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Healthcare and M Large 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 M Large Cap are associated (or correlated) with Delaware Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Healthcare has no effect on the direction of M Large i.e., M Large and Delaware Healthcare go up and down completely randomly.

Pair Corralation between M Large and Delaware Healthcare

Assuming the 90 days horizon M Large Cap is expected to under-perform the Delaware Healthcare. In addition to that, M Large is 2.76 times more volatile than Delaware Healthcare Fund. It trades about -0.26 of its total potential returns per unit of risk. Delaware Healthcare Fund is currently generating about -0.23 per unit of volatility. If you would invest  2,510  in Delaware Healthcare Fund on October 5, 2024 and sell it today you would lose (102.00) from holding Delaware Healthcare Fund or give up 4.06% of portfolio value over 90 days.

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

M Large Cap  vs.  Delaware Healthcare Fund

M Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with M Large and Delaware Healthcare

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

The idea behind M Large Cap and Delaware Healthcare Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.