Correlation Between Applied Finance and Utilities Fund
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Utilities Fund 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 Applied Finance and Utilities Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Utilities Fund Class, you can compare the effects of market volatilities on Applied Finance and Utilities Fund 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 Applied Finance with a short position of Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Utilities Fund.
Diversification Opportunities for Applied Finance and Utilities Fund
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and Utilities is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Utilities Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Class and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Class has no effect on the direction of Applied Finance i.e., Applied Finance and Utilities Fund go up and down completely randomly.
Pair Corralation between Applied Finance and Utilities Fund
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.14 times more return on investment than Utilities Fund. However, Applied Finance is 1.14 times more volatile than Utilities Fund Class. It trades about 0.05 of its potential returns per unit of risk. Utilities Fund Class is currently generating about 0.04 per unit of risk. If you would invest 1,778 in Applied Finance Explorer on November 9, 2024 and sell it today you would earn a total of 487.00 from holding Applied Finance Explorer or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Utilities Fund Class
Performance |
| Timeline |
| Applied Finance Explorer |
| Utilities Fund Class |
Applied Finance and Utilities Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Utilities Fund
The main advantage of trading using opposite Applied Finance and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Utilities Fund 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 Utilities Fund will offset losses from the drop in Utilities Fund's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Utilities Fund vs. Health Care Fund | Utilities Fund vs. Hartford Healthcare Hls | Utilities Fund vs. Alger Health Sciences | Utilities Fund vs. Blackrock Health Sciences |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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