Correlation Between Utilities Fund and Sp 500
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Sp 500 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 Sp 500 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 Sp 500 Fund, you can compare the effects of market volatilities on Utilities Fund and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Sp 500.
Diversification Opportunities for Utilities Fund and Sp 500
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Utilities and RYSPX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Sp 500 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Fund has no effect on the direction of Utilities Fund i.e., Utilities Fund and Sp 500 go up and down completely randomly.
Pair Corralation between Utilities Fund and Sp 500
Assuming the 90 days horizon Utilities Fund Class is expected to generate 1.1 times more return on investment than Sp 500. However, Utilities Fund is 1.1 times more volatile than Sp 500 Fund. It trades about 0.4 of its potential returns per unit of risk. Sp 500 Fund is currently generating about 0.33 per unit of risk. If you would invest 4,948 in Utilities Fund Class on September 2, 2024 and sell it today you would earn a total of 349.00 from holding Utilities Fund Class or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Class vs. Sp 500 Fund
Performance |
| Timeline |
| Utilities Fund Class |
| Sp 500 Fund |
Utilities Fund and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Sp 500
The main advantage of trading using opposite Utilities Fund and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Utilities Fund vs. Dominion Energy | Utilities Fund vs. Atlantica Sustainable Infrastructure | Utilities Fund vs. Consolidated Edison | Utilities Fund vs. Eversource Energy |
| Sp 500 vs. Sp 500 Pure | Sp 500 vs. Russell 2000 Fund | Sp 500 vs. Sp Smallcap 600 | Sp 500 vs. Sp Midcap 400 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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