Correlation Between Utilities Fund and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Dominion Energy 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 Dominion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Fund Class and Dominion Energy, you can compare the effects of market volatilities on Utilities Fund and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Dominion Energy.
Diversification Opportunities for Utilities Fund and Dominion Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Utilities and Dominion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Class are associated (or correlated) with Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of Utilities Fund i.e., Utilities Fund and Dominion Energy go up and down completely randomly.
Pair Corralation between Utilities Fund and Dominion Energy
Assuming the 90 days horizon Utilities Fund Class is expected to generate 0.65 times more return on investment than Dominion Energy. However, Utilities Fund Class is 1.55 times less risky than Dominion Energy. It trades about 0.06 of its potential returns per unit of risk. Dominion Energy is currently generating about 0.0 per unit of risk. If you would invest 5,045 in Utilities Fund Class on September 5, 2024 and sell it today you would earn a total of 112.00 from holding Utilities Fund Class or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Class vs. Dominion Energy
Performance |
| Timeline |
| Utilities Fund Class |
| Dominion Energy |
Utilities Fund and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Dominion Energy
The main advantage of trading using opposite Utilities Fund and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| Utilities Fund vs. Dominion Energy | Utilities Fund vs. Atlantica Sustainable Infrastructure | Utilities Fund vs. Consolidated Edison | Utilities Fund vs. Eversource Energy |
| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |