Correlation Between Delaware Emerging and Financial Industries

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

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

Diversification Opportunities for Delaware Emerging and Financial Industries

0.66

Correlation Coefficient

Delaware Emerging  Financial Industries

Poor diversification

The 3 months correlation between Delaware and Financial is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Emerging Markets and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Delaware Emerging 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 Emerging Markets are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Delaware Emerging i.e., Delaware Emerging and Financial Industries go up and down completely randomly.

Pair Corralation between Delaware Emerging and Financial Industries

Assuming the 90 days horizon Delaware Emerging Markets is expected to generate 1.59 times more return on investment than Financial Industries. However, Delaware Emerging is 1.59 times more volatile than Financial Industries Fund. It trades about 0.17 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.09 per unit of risk. If you would invest  2,080  in Delaware Emerging Markets on May 28, 2025 and sell it today you would earn a total of  307.00  from holding Delaware Emerging Markets or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Delaware Emerging Markets  vs.  Financial Industries Fund

Delaware Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Emerging Markets are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Delaware Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Financial Industries

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delaware Emerging and Financial Industries

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

The idea behind Delaware Emerging Markets and Financial Industries 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.