Correlation Between Delaware Healthcare and Optimum Small-mid

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

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

Diversification Opportunities for Delaware Healthcare and Optimum Small-mid

-0.68

Correlation Coefficient

Delaware Healthcare  Optimum Small-mid

Excellent diversification

The 3 months correlation between Delaware and Optimum is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Healthcare Fund and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid and Delaware Healthcare 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 Delaware Healthcare Fund are associated (or correlated) with Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Delaware Healthcare i.e., Delaware Healthcare and Optimum Small-mid go up and down completely randomly.

Pair Corralation between Delaware Healthcare and Optimum Small-mid

Assuming the 90 days horizon Delaware Healthcare Fund is expected to under-perform the Optimum Small-mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Delaware Healthcare Fund is 1.32 times less risky than Optimum Small-mid. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Optimum Small Mid Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,497  in Optimum Small Mid Cap on September 3, 2024 and sell it today you would earn a total of  184.00  from holding Optimum Small Mid Cap or generate 12.29% return on investment over 90 days.

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

Delaware Healthcare Fund  vs.  Optimum Small Mid Cap

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 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.

Optimum Small Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Small Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Optimum Small-mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Delaware Healthcare and Optimum Small-mid

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

The idea behind Delaware Healthcare Fund and Optimum Small Mid Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.