Correlation Between Nasdaq-100(r) and Delaware Investments

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Delaware Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Delaware Investments Ultrashort, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Delaware Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Delaware Investments.

Diversification Opportunities for Nasdaq-100(r) and Delaware Investments

0.52

Correlation Coefficient

Nasdaq-100(r)  Delaware Investments

Very weak diversification

The 3 months correlation between Nasdaq-100(r) and Delaware is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Delaware Investments Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Investments and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Nasdaq-100(r) i.e., Nasdaq-100(r) and Delaware Investments go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Delaware Investments

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 24.6 times more return on investment than Delaware Investments. However, Nasdaq-100(r) is 24.6 times more volatile than Delaware Investments Ultrashort. It trades about 0.1 of its potential returns per unit of risk. Delaware Investments Ultrashort is currently generating about 0.21 per unit of risk. If you would invest  14,640  in Nasdaq 100 2x Strategy on October 10, 2024 and sell it today you would earn a total of  24,600  from holding Nasdaq 100 2x Strategy or generate 168.03% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Delaware Investments Ultrashor

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Delaware Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Investments Ultrashort are ranked lower than 9 (%) 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 Nasdaq-100(r) and Delaware Investments

The main advantage of trading using opposite Nasdaq-100(r) and Delaware Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.