Correlation Between TCW Transform and Utilities Select

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

By analyzing existing cross correlation between TCW Transform Supply and Utilities Select Sector, you can compare the effects of market volatilities on TCW Transform and Utilities Select 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 TCW Transform with a short position of Utilities Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCW Transform and Utilities Select.

Diversification Opportunities for TCW Transform and Utilities Select

0.88

Correlation Coefficient

TCW Transform  Utilities Select

Very poor diversification

The 3 months correlation between TCW and Utilities is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TCW Transform Supply and Utilities Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Select Sector and TCW Transform 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 TCW Transform Supply are associated (or correlated) with Utilities Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Select Sector has no effect on the direction of TCW Transform i.e., TCW Transform and Utilities Select go up and down completely randomly.

Pair Corralation between TCW Transform and Utilities Select

Given the investment horizon of 90 days TCW Transform Supply is expected to generate 0.97 times more return on investment than Utilities Select. However, TCW Transform Supply is 1.03 times less risky than Utilities Select. It trades about 0.24 of its potential returns per unit of risk. Utilities Select Sector is currently generating about 0.16 per unit of risk. If you would invest  6,115  in TCW Transform Supply on May 3, 2025 and sell it today you would earn a total of  808.00  from holding TCW Transform Supply or generate 13.21% return on investment over 90 days.

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

TCW Transform Supply  vs.  Utilities Select Sector

TCW Transform Supply

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TCW Transform Supply are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, TCW Transform reported solid returns over the last few months and may actually be approaching a breakup point.

Utilities Select Sector

Risk-Adjusted Performance

Good

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

Pair Trading with TCW Transform and Utilities Select

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

The idea behind TCW Transform Supply and Utilities Select Sector 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.