Correlation Between Utilities Fund and Health Care
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Health Care 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 Health Care 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 Health Care Fund, you can compare the effects of market volatilities on Utilities Fund and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Health Care.
Diversification Opportunities for Utilities Fund and Health Care
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Utilities and Health is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care 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 Class are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Utilities Fund i.e., Utilities Fund and Health Care go up and down completely randomly.
Pair Corralation between Utilities Fund and Health Care
Assuming the 90 days horizon Utilities Fund Class is expected to generate 1.11 times more return on investment than Health Care. However, Utilities Fund is 1.11 times more volatile than Health Care Fund. It trades about 0.23 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.1 per unit of risk. If you would invest 5,058 in Utilities Fund Class on September 1, 2024 and sell it today you would earn a total of 239.00 from holding Utilities Fund Class or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Utilities Fund Class vs. Health Care Fund
Performance |
| Timeline |
| Utilities Fund Class |
| Health Care Fund |
Utilities Fund and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Health Care
The main advantage of trading using opposite Utilities Fund and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Utilities Fund vs. Dominion Energy | Utilities Fund vs. Atlantica Sustainable Infrastructure | Utilities Fund vs. Consolidated Edison | Utilities Fund vs. Eversource Energy |
| Health Care vs. Kinetics Small Cap | Health Care vs. Victory Rs Small | Health Care vs. Tax Managed Mid Small | Health Care vs. Artisan Small Cap |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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