Correlation Between Utilities Fund and High Yield
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and High Yield 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 Utilities Fund and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Fund Investor and High Yield Fund R, you can compare the effects of market volatilities on Utilities Fund and High Yield 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 Utilities Fund with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and High Yield.
Diversification Opportunities for Utilities Fund and High Yield
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Utilities and High is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Investor and High Yield Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Utilities Fund 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 Utilities Fund Investor are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Utilities Fund i.e., Utilities Fund and High Yield go up and down completely randomly.
Pair Corralation between Utilities Fund and High Yield
Assuming the 90 days horizon Utilities Fund Investor is expected to under-perform the High Yield. In addition to that, Utilities Fund is 7.25 times more volatile than High Yield Fund R. It trades about -0.02 of its total potential returns per unit of risk. High Yield Fund R is currently generating about 0.14 per unit of volatility. If you would invest 512.00 in High Yield Fund R on September 13, 2024 and sell it today you would earn a total of 2.00 from holding High Yield Fund R or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Investor vs. High Yield Fund R
Performance |
| Timeline |
| Utilities Fund Investor |
| High Yield Fund |
Utilities Fund and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and High Yield
The main advantage of trading using opposite Utilities Fund and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Utilities Fund vs. Real Estate Fund | Utilities Fund vs. Emerging Markets Fund | Utilities Fund vs. Heritage Fund Investor | Utilities Fund vs. Global Gold Fund |
| High Yield vs. High Yield Municipal Fund | High Yield vs. Diversified Bond Fund | High Yield vs. Ginnie Mae Fund | High Yield vs. Utilities Fund Investor |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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