Correlation Between Litman Gregory and Utilities Fund

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

By analyzing existing cross correlation between Litman Gregory Funds and Utilities Fund Investor, you can compare the effects of market volatilities on Litman Gregory and Utilities Fund 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 Litman Gregory with a short position of Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Utilities Fund.

Diversification Opportunities for Litman Gregory and Utilities Fund

0.39

Correlation Coefficient

Litman Gregory  Utilities Fund

Weak diversification

The 3 months correlation between Litman and Utilities is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds and Utilities Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Investor and Litman Gregory 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 Litman Gregory Funds are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Investor has no effect on the direction of Litman Gregory i.e., Litman Gregory and Utilities Fund go up and down completely randomly.

Pair Corralation between Litman Gregory and Utilities Fund

Given the investment horizon of 90 days Litman Gregory Funds is expected to under-perform the Utilities Fund. In addition to that, Litman Gregory is 1.4 times more volatile than Utilities Fund Investor. It trades about -0.08 of its total potential returns per unit of risk. Utilities Fund Investor is currently generating about 0.08 per unit of volatility. If you would invest  6,594  in Utilities Fund Investor on August 22, 2025 and sell it today you would earn a total of  236.00  from holding Utilities Fund Investor or generate 3.58% return on investment over 90 days.

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

Litman Gregory Funds  vs.  Utilities Fund Investor

Litman Gregory Funds

Risk-Adjusted Performance

Weakest

Over the last 90 days Litman Gregory Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Litman Gregory is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Utilities Fund Investor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Investor are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Utilities Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Litman Gregory and Utilities Fund

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

The idea behind Litman Gregory Funds and Utilities Fund Investor 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.