Correlation Between Optimum Fixed and Delaware Reit

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

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

Diversification Opportunities for Optimum Fixed and Delaware Reit

0.79

Correlation Coefficient

Optimum Fixed  Delaware Reit

Poor diversification

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

Pair Corralation between Optimum Fixed and Delaware Reit

Assuming the 90 days horizon Optimum Fixed Income is expected to under-perform the Delaware Reit. But the mutual fund apears to be less risky and, when comparing its historical volatility, Optimum Fixed Income is 1.09 times less risky than Delaware Reit. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Delaware Reit Fund is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,266  in Delaware Reit Fund on September 14, 2024 and sell it today you would lose (38.00) from holding Delaware Reit Fund or give up 3.0% of portfolio value over 90 days.

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

Optimum Fixed Income  vs.  Delaware Reit Fund

Optimum Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Delaware Reit

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Optimum Fixed and Delaware Reit

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

The idea behind Optimum Fixed Income and Delaware Reit 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.