Correlation Between IShares Utilities and Utilities Select
Can any of the company-specific risk be diversified away by investing in both IShares Utilities 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 IShares Utilities and Utilities Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Utilities ETF and Utilities Select Sector, you can compare the effects of market volatilities on IShares Utilities 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 IShares Utilities with a short position of Utilities Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and Utilities Select.
Diversification Opportunities for IShares Utilities and Utilities Select
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Utilities is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF 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 IShares Utilities 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 iShares Utilities ETF 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 IShares Utilities i.e., IShares Utilities and Utilities Select go up and down completely randomly.
Pair Corralation between IShares Utilities and Utilities Select
Considering the 90-day investment horizon iShares Utilities ETF is expected to under-perform the Utilities Select. But the etf apears to be less risky and, when comparing its historical volatility, iShares Utilities ETF is 1.04 times less risky than Utilities Select. The etf trades about -0.14 of its potential returns per unit of risk. The Utilities Select Sector is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 8,253 in Utilities Select Sector on March 19, 2025 and sell it today you would lose (151.00) from holding Utilities Select Sector or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
iShares Utilities ETF vs. Utilities Select Sector
Performance |
| Timeline |
| iShares Utilities ETF |
| Utilities Select Sector |
IShares Utilities and Utilities Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and Utilities Select
The main advantage of trading using opposite IShares Utilities and Utilities Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities 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.| IShares Utilities vs. iShares Industrials ETF | IShares Utilities vs. iShares Consumer Discretionary | IShares Utilities vs. iShares Consumer Staples | IShares Utilities vs. iShares Telecommunications ETF |
| Utilities Select vs. Consumer Staples Select | Utilities Select vs. Industrial Select Sector | Utilities Select vs. Materials Select Sector | Utilities Select vs. Health Care Select |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |