Correlation Between Dow Jones and Utilities Select
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Utilities Select 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 Dow Jones and Utilities Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Utilities Select Sector, you can compare the effects of market volatilities on Dow Jones and Utilities Select 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 Dow Jones with a short position of Utilities Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Utilities Select.
Diversification Opportunities for Dow Jones and Utilities Select
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Utilities is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Utilities Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Select Sector and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Utilities Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Select Sector has no effect on the direction of Dow Jones i.e., Dow Jones and Utilities Select go up and down completely randomly.
Pair Corralation between Dow Jones and Utilities Select
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.44 times less return on investment than Utilities Select. But when comparing it to its historical volatility, Dow Jones Industrial is 1.12 times less risky than Utilities Select. It trades about 0.12 of its potential returns per unit of risk. Utilities Select Sector is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8,348 in Utilities Select Sector on August 31, 2025 and sell it today you would earn a total of 651.00 from holding Utilities Select Sector or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Utilities Select Sector
Performance |
| Timeline |
Dow Jones and Utilities Select Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Utilities Select Sector
Pair trading matchups for Utilities Select
Pair Trading with Dow Jones and Utilities Select
The main advantage of trading using opposite Dow Jones and Utilities Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Utilities Select 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 Select will offset losses from the drop in Utilities Select's long position.| Dow Jones vs. Strainsforpains | Dow Jones vs. Liberty Broadband | Dow Jones vs. Slide Insurance Holdings, | Dow Jones vs. EROAD Limited |
| Utilities Select vs. Ultimus Managers Trust | Utilities Select vs. American Beacon Select | Utilities Select vs. Direxion Daily SP | Utilities Select vs. EA Series Trust |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |