Correlation Between Utilities Fund and High Income
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and High Income 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 Income 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 Income Fund, you can compare the effects of market volatilities on Utilities Fund and High Income 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 Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and High Income.
Diversification Opportunities for Utilities Fund and High Income
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Utilities and High is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Investor and High Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income 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 Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of Utilities Fund i.e., Utilities Fund and High Income go up and down completely randomly.
Pair Corralation between Utilities Fund and High Income
Assuming the 90 days horizon Utilities Fund Investor is expected to generate 8.31 times more return on investment than High Income. However, Utilities Fund is 8.31 times more volatile than High Income Fund. It trades about 0.16 of its potential returns per unit of risk. High Income Fund is currently generating about 0.23 per unit of risk. If you would invest 1,858 in Utilities Fund Investor on September 1, 2024 and sell it today you would earn a total of 70.00 from holding Utilities Fund Investor or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Utilities Fund Investor vs. High Income Fund
Performance |
| Timeline |
| Utilities Fund Investor |
| High Income Fund |
Utilities Fund and High Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and High Income
The main advantage of trading using opposite Utilities Fund and High Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, High Income 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 Income will offset losses from the drop in High Income'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 Income vs. High Yield Municipal Fund | High Income vs. Diversified Bond Fund | High Income vs. Utilities Fund Investor | High Income vs. Emerging Markets 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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