Correlation Between SWP Growth and Utilities Select

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

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

Diversification Opportunities for SWP Growth and Utilities Select

0.57

Correlation Coefficient

SWP Growth  Utilities Select

Very weak diversification

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

Pair Corralation between SWP Growth and Utilities Select

Considering the 90-day investment horizon SWP Growth is expected to generate 1.36 times less return on investment than Utilities Select. But when comparing it to its historical volatility, SWP Growth Income is 1.48 times less risky than Utilities Select. It trades about 0.18 of its potential returns per unit of risk. Utilities Select Sector is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,129  in Utilities Select Sector on July 3, 2025 and sell it today you would earn a total of  676.00  from holding Utilities Select Sector or generate 8.32% return on investment over 90 days.

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

SWP Growth Income  vs.  Utilities Select Sector

SWP Growth Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SWP Growth Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 13 (%) 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 November 2025.

Pair Trading with SWP Growth and Utilities Select

The main advantage of trading using opposite SWP Growth and Utilities Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWP Growth 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 SWP Growth Income 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.