Correlation Between Select Fund and Utilities Fund

Can any of the company-specific risk be diversified away by investing in both Select Fund and Utilities Fund 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 Select Fund and Utilities Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Select Fund A and Utilities Fund Investor, you can compare the effects of market volatilities on Select Fund and Utilities Fund 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 Select Fund with a short position of Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Utilities Fund.

Diversification Opportunities for Select Fund and Utilities Fund

0.64

Correlation Coefficient

Select Fund  Utilities Fund

Poor diversification

The 3 months correlation between Select and Utilities is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund A and Utilities Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Investor and Select 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 Select Fund A are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Investor has no effect on the direction of Select Fund i.e., Select Fund and Utilities Fund go up and down completely randomly.

Pair Corralation between Select Fund and Utilities Fund

Assuming the 90 days horizon Select Fund A is expected to generate 1.31 times more return on investment than Utilities Fund. However, Select Fund is 1.31 times more volatile than Utilities Fund Investor. It trades about 0.12 of its potential returns per unit of risk. Utilities Fund Investor is currently generating about 0.13 per unit of risk. If you would invest  12,490  in Select Fund A on September 3, 2025 and sell it today you would earn a total of  954.00  from holding Select Fund A or generate 7.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Select Fund A  vs.  Utilities Fund Investor

Select Fund A

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Select Fund A are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Select Fund may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Utilities Fund Investor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Investor are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Utilities Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Select Fund and Utilities Fund

The main advantage of trading using opposite Select Fund and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Utilities Fund 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 Utilities Fund will offset losses from the drop in Utilities Fund's long position.

The idea behind Select Fund A and Utilities Fund Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.