Correlation Between Utilities Fund and Inverse Dow
Can any of the company-specific risk be diversified away by investing in both Utilities Fund and Inverse Dow 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 Inverse Dow 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 Inverse Dow 2x, you can compare the effects of market volatilities on Utilities Fund and Inverse Dow 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 Inverse Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Fund and Inverse Dow.
Diversification Opportunities for Utilities Fund and Inverse Dow
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Utilities and Inverse is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Fund Class and Inverse Dow 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Dow 2x 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 Inverse Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Dow 2x has no effect on the direction of Utilities Fund i.e., Utilities Fund and Inverse Dow go up and down completely randomly.
Pair Corralation between Utilities Fund and Inverse Dow
Assuming the 90 days horizon Utilities Fund Class is expected to generate 0.51 times more return on investment than Inverse Dow. However, Utilities Fund Class is 1.94 times less risky than Inverse Dow. It trades about 0.18 of its potential returns per unit of risk. Inverse Dow 2x is currently generating about -0.1 per unit of risk. If you would invest 5,539 in Utilities Fund Class on September 1, 2025 and sell it today you would earn a total of 454.00 from holding Utilities Fund Class or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Fund Class vs. Inverse Dow 2x
Performance |
| Timeline |
| Utilities Fund Class |
| Inverse Dow 2x |
Utilities Fund and Inverse Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Fund and Inverse Dow
The main advantage of trading using opposite Utilities Fund and Inverse Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Fund position performs unexpectedly, Inverse Dow 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 Inverse Dow will offset losses from the drop in Inverse Dow's long position.| Utilities Fund vs. Franklin Real Estate | Utilities Fund vs. Voya Real Estate | Utilities Fund vs. Fidelity Real Estate | Utilities Fund vs. Columbia Real Estate |
| Inverse Dow vs. Eagle Growth Income | Inverse Dow vs. The Hartford Growth | Inverse Dow vs. Auer Growth Fund | Inverse Dow vs. Gamco International Growth |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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