Correlation Between First Investors and Delaware Tax-free

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Can any of the company-specific risk be diversified away by investing in both First Investors and Delaware Tax-free 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 First Investors and Delaware Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Tax and Delaware Tax Free Usa, you can compare the effects of market volatilities on First Investors and Delaware Tax-free 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 First Investors with a short position of Delaware Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Delaware Tax-free.

Diversification Opportunities for First Investors and Delaware Tax-free

FirstDelawareDiversified AwayFirstDelawareDiversified Away100%
0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between First and Delaware is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Tax and Delaware Tax Free Usa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Tax Free and First Investors 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 First Investors Tax are associated (or correlated) with Delaware Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Tax Free has no effect on the direction of First Investors i.e., First Investors and Delaware Tax-free go up and down completely randomly.

Pair Corralation between First Investors and Delaware Tax-free

Assuming the 90 days horizon First Investors Tax is expected to generate 0.82 times more return on investment than Delaware Tax-free. However, First Investors Tax is 1.23 times less risky than Delaware Tax-free. It trades about 0.17 of its potential returns per unit of risk. Delaware Tax Free Usa is currently generating about 0.14 per unit of risk. If you would invest  1,220  in First Investors Tax on November 25, 2024 and sell it today you would earn a total of  12.00  from holding First Investors Tax or generate 0.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

First Investors Tax  vs.  Delaware Tax Free Usa

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -2-1012
JavaScript chart by amCharts 3.21.15FTORX DMTFX
       Timeline  
First Investors Tax 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days First Investors Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, First Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb12.112.1512.212.2512.312.3512.412.4512.5
Delaware Tax Free 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Delaware Tax Free Usa has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Delaware Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.310.410.510.610.710.8

First Investors and Delaware Tax-free Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.9-0.64-0.38-0.12-0.010.08940.330.590.851.11 1234
JavaScript chart by amCharts 3.21.15FTORX DMTFX
       Returns  

Pair Trading with First Investors and Delaware Tax-free

The main advantage of trading using opposite First Investors and Delaware Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors position performs unexpectedly, Delaware Tax-free 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 Tax-free will offset losses from the drop in Delaware Tax-free's long position.
The idea behind First Investors Tax and Delaware Tax Free Usa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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