Correlation Between Utilities Fund and Global Growth
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Global Growth 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 Global Growth 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 Global Growth Fund, you can compare the effects of market volatilities on Utilities Fund and Global Growth 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 Global Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Global Growth.
Diversification Opportunities for Utilities Fund and Global Growth
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Utilities and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Investor and Global Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Growth 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 Global Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Growth has no effect on the direction of Utilities Fund i.e., Utilities Fund and Global Growth go up and down completely randomly.
Pair Corralation between Utilities Fund and Global Growth
Assuming the 90 days horizon Utilities Fund Investor is expected to generate 1.19 times more return on investment than Global Growth. However, Utilities Fund is 1.19 times more volatile than Global Growth Fund. It trades about 0.05 of its potential returns per unit of risk. Global Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 1,503 in Utilities Fund Investor on August 27, 2024 and sell it today you would earn a total of 398.00 from holding Utilities Fund Investor or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Investor vs. Global Growth Fund
Performance |
| Timeline |
| Utilities Fund Investor |
| Global Growth |
Utilities Fund and Global Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Global Growth
The main advantage of trading using opposite Utilities Fund and Global Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Global Growth 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 Global Growth will offset losses from the drop in Global Growth'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 |
| Global Growth vs. Emerging Markets Fund | Global Growth vs. International Growth Fund | Global Growth vs. Heritage Fund Investor | Global Growth vs. Select 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |