Correlation Between Optimum Fixed and Delaware Small

Can any of the company-specific risk be diversified away by investing in both Optimum Fixed and Delaware Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Optimum Fixed and Delaware Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Fixed and Delaware Small.

Diversification Opportunities for Optimum Fixed and Delaware Small

-0.56

Correlation Coefficient

Optimum Fixed  Delaware Small

Excellent diversification

The 3 months correlation between OPTIMUM and Delaware is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Fixed Income and Delaware Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Small Cap has no effect on the direction of Optimum Fixed i.e., Optimum Fixed and Delaware Small go up and down completely randomly.

Pair Corralation between Optimum Fixed and Delaware Small

Assuming the 90 days horizon Optimum Fixed Income is expected to under-perform the Delaware Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Optimum Fixed Income is 3.87 times less risky than Delaware Small. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Delaware Small Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,385  in Delaware Small Cap on September 4, 2024 and sell it today you would earn a total of  298.00  from holding Delaware Small Cap or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Optimum Fixed Income  vs.  Delaware Small Cap

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 Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Delaware Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Optimum Fixed and Delaware Small

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

The idea behind Optimum Fixed Income and Delaware Small 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.