Correlation Between Utilities Select and Defense And

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

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

Diversification Opportunities for Utilities Select and Defense And

0.79

Correlation Coefficient

Utilities Select  Defense And

Poor diversification

The 3 months correlation between Utilities and Defense is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Select Sector and Defense And Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense And Aerospace and Utilities Select 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 Utilities Select Sector are associated (or correlated) with Defense And. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense And Aerospace has no effect on the direction of Utilities Select i.e., Utilities Select and Defense And go up and down completely randomly.

Pair Corralation between Utilities Select and Defense And

Considering the 90-day investment horizon Utilities Select Sector is expected to generate 0.76 times more return on investment than Defense And. However, Utilities Select Sector is 1.31 times less risky than Defense And. It trades about 0.1 of its potential returns per unit of risk. Defense And Aerospace is currently generating about 0.06 per unit of risk. If you would invest  8,468  in Utilities Select Sector on August 18, 2025 and sell it today you would earn a total of  408.00  from holding Utilities Select Sector or generate 4.82% return on investment over 90 days.

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

Utilities Select Sector  vs.  Defense And Aerospace

Utilities Select Sector

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Select Sector are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Utilities Select is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Defense And Aerospace

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Defense And Aerospace are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Defense And is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Utilities Select and Defense And

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

The idea behind Utilities Select Sector and Defense And Aerospace 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.