Correlation Between Optimum International and Delaware Emerging
Can any of the company-specific risk be diversified away by investing in both Optimum International and Delaware Emerging 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 International and Delaware Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum International Fund and Delaware Emerging Markets, you can compare the effects of market volatilities on Optimum International and Delaware Emerging 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 International with a short position of Delaware Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum International and Delaware Emerging.
Diversification Opportunities for Optimum International and Delaware Emerging
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Optimum and Delaware is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Optimum International Fund and Delaware Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Emerging Markets and Optimum International 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 International Fund are associated (or correlated) with Delaware Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Emerging Markets has no effect on the direction of Optimum International i.e., Optimum International and Delaware Emerging go up and down completely randomly.
Pair Corralation between Optimum International and Delaware Emerging
Assuming the 90 days horizon Optimum International is expected to generate 1.11 times less return on investment than Delaware Emerging. But when comparing it to its historical volatility, Optimum International Fund is 1.33 times less risky than Delaware Emerging. It trades about 0.05 of its potential returns per unit of risk. Delaware Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,687 in Delaware Emerging Markets on August 26, 2024 and sell it today you would earn a total of 398.00 from holding Delaware Emerging Markets or generate 23.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimum International Fund vs. Delaware Emerging Markets
Performance |
| Timeline |
| Optimum International |
| Delaware Emerging Markets |
Optimum International and Delaware Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum International and Delaware Emerging
The main advantage of trading using opposite Optimum International and Delaware Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum International position performs unexpectedly, Delaware Emerging 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 Emerging will offset losses from the drop in Delaware Emerging's long position.The idea behind Optimum International Fund and Delaware Emerging Markets 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.
| Delaware Emerging vs. Delaware Diversified Income | Delaware Emerging vs. Delaware Small Cap | Delaware Emerging vs. Delaware Value Fund | Delaware Emerging vs. Delaware Reit Fund |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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