Correlation Between Vanguard Total and Delaware Healthcare

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

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

Diversification Opportunities for Vanguard Total and Delaware Healthcare

0.75

Correlation Coefficient

Vanguard Total  Delaware Healthcare

Poor diversification

The 3 months correlation between Vanguard and Delaware is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Delaware Healthcare Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Healthcare and Vanguard Total 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 Vanguard Total International 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 Vanguard Total i.e., Vanguard Total and Delaware Healthcare go up and down completely randomly.

Pair Corralation between Vanguard Total and Delaware Healthcare

Assuming the 90 days horizon Vanguard Total International is expected to generate 1.06 times more return on investment than Delaware Healthcare. However, Vanguard Total is 1.06 times more volatile than Delaware Healthcare Fund. It trades about 0.12 of its potential returns per unit of risk. Delaware Healthcare Fund is currently generating about 0.04 per unit of risk. If you would invest  13,329  in Vanguard Total International on December 30, 2024 and sell it today you would earn a total of  824.00  from holding Vanguard Total International or generate 6.18% return on investment over 90 days.

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

Vanguard Total International  vs.  Delaware Healthcare Fund

Vanguard Total Inter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Delaware Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Healthcare Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Delaware Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Delaware Healthcare

The main advantage of trading using opposite Vanguard Total and Delaware Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.