Correlation Between Utilities Select and Vanguard California
Can any of the company-specific risk be diversified away by investing in both Utilities Select and Vanguard California 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 Vanguard California 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 Vanguard California Intermediate Term, you can compare the effects of market volatilities on Utilities Select and Vanguard California 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 Vanguard California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Utilities Select and Vanguard California.
Diversification Opportunities for Utilities Select and Vanguard California
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Utilities and Vanguard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Select Sector and Vanguard California Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard California 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 Vanguard California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard California has no effect on the direction of Utilities Select i.e., Utilities Select and Vanguard California go up and down completely randomly.
Pair Corralation between Utilities Select and Vanguard California
Considering the 90-day investment horizon Utilities Select Sector is expected to generate 6.16 times more return on investment than Vanguard California. However, Utilities Select is 6.16 times more volatile than Vanguard California Intermediate Term. It trades about 0.1 of its potential returns per unit of risk. Vanguard California Intermediate Term is currently generating about 0.45 per unit of risk. If you would invest 8,468 in Utilities Select Sector on August 16, 2025 and sell it today you would earn a total of 400.00 from holding Utilities Select Sector or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Utilities Select Sector vs. Vanguard California Intermedia
Performance |
| Timeline |
| Utilities Select Sector |
| Vanguard California |
Utilities Select and Vanguard California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Utilities Select and Vanguard California
The main advantage of trading using opposite Utilities Select and Vanguard California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utilities Select position performs unexpectedly, Vanguard California 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 Vanguard California will offset losses from the drop in Vanguard California's long position.| Utilities Select vs. Schwab Fundamental Large | Utilities Select vs. Vanguard Explorer Fund | Utilities Select vs. iShares MSCI Emerging | Utilities Select vs. SPDR SP Dividend |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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