Correlation Between Utilities Select and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Utilities Select and IShares Consumer 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 Select and IShares Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Utilities Select Sector and iShares Consumer Staples, you can compare the effects of market volatilities on Utilities Select and IShares Consumer 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 Select with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Select and IShares Consumer.
Diversification Opportunities for Utilities Select and IShares Consumer
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Utilities and IShares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Select Sector and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and Utilities Select 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 Select Sector are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of Utilities Select i.e., Utilities Select and IShares Consumer go up and down completely randomly.
Pair Corralation between Utilities Select and IShares Consumer
Considering the 90-day investment horizon Utilities Select Sector is expected to generate 1.63 times more return on investment than IShares Consumer. However, Utilities Select is 1.63 times more volatile than iShares Consumer Staples. It trades about 0.31 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.31 per unit of risk. If you would invest 7,813 in Utilities Select Sector on September 2, 2024 and sell it today you would earn a total of 480.00 from holding Utilities Select Sector or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Select Sector vs. iShares Consumer Staples
Performance |
| Timeline |
| Utilities Select Sector |
| iShares Consumer Staples |
Utilities Select and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Select and IShares Consumer
The main advantage of trading using opposite Utilities Select and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Select position performs unexpectedly, IShares Consumer 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 IShares Consumer will offset losses from the drop in IShares Consumer's long position.| Utilities Select vs. Consumer Staples Select | Utilities Select vs. Industrial Select Sector | Utilities Select vs. Materials Select Sector | Utilities Select vs. Health Care Select |
| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |