Correlation Between IShares Trust and Utilities Portfolio

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

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

Diversification Opportunities for IShares Trust and Utilities Portfolio

0.9

Correlation Coefficient

IShares Trust  Utilities Portfolio

Almost no diversification

The 3 months correlation between IShares and Utilities is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio and IShares Trust 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 Trust are associated (or correlated) with Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of IShares Trust i.e., IShares Trust and Utilities Portfolio go up and down completely randomly.

Pair Corralation between IShares Trust and Utilities Portfolio

Given the investment horizon of 90 days IShares Trust is expected to generate 2.85 times less return on investment than Utilities Portfolio. But when comparing it to its historical volatility, iShares Trust is 5.28 times less risky than Utilities Portfolio. It trades about 0.3 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  12,191  in Utilities Portfolio Utilities on May 2, 2025 and sell it today you would earn a total of  1,028  from holding Utilities Portfolio Utilities or generate 8.43% return on investment over 90 days.

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

iShares Trust   vs.  Utilities Portfolio Utilities

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Utilities Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Portfolio Utilities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Utilities Portfolio may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Trust and Utilities Portfolio

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

The idea behind iShares Trust and Utilities Portfolio Utilities 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.