Correlation Between Consumer Products and Utilities Fund

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

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

Diversification Opportunities for Consumer Products and Utilities Fund

-0.57

Correlation Coefficient

Consumer Products  Utilities Fund

Excellent diversification

The 3 months correlation between Consumer and Utilities is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Products Fund 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 Consumer Products 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 Consumer Products Fund 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 Consumer Products i.e., Consumer Products and Utilities Fund go up and down completely randomly.

Pair Corralation between Consumer Products and Utilities Fund

Assuming the 90 days horizon Consumer Products Fund is expected to under-perform the Utilities Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Consumer Products Fund is 1.03 times less risky than Utilities Fund. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Utilities Fund Investor is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,447  in Utilities Fund Investor on September 3, 2025 and sell it today you would earn a total of  390.00  from holding Utilities Fund Investor or generate 6.05% return on investment over 90 days.

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

Consumer Products Fund  vs.  Utilities Fund Investor

Consumer Products

Risk-Adjusted Performance

Weakest

Over the last 90 days Consumer Products Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Consumer Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 9 (%) 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 Consumer Products and Utilities Fund

The main advantage of trading using opposite Consumer Products and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Products 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 Consumer Products Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.