Correlation Between Utilities Portfolio and Zevenbergen Growth

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

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

Diversification Opportunities for Utilities Portfolio and Zevenbergen Growth

0.75

Correlation Coefficient

Utilities Portfolio  Zevenbergen Growth

Poor diversification

The 3 months correlation between Utilities and Zevenbergen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Utilities Portfolio Utilities and Zevenbergen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevenbergen Growth and Utilities Portfolio 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 Portfolio Utilities are associated (or correlated) with Zevenbergen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevenbergen Growth has no effect on the direction of Utilities Portfolio i.e., Utilities Portfolio and Zevenbergen Growth go up and down completely randomly.

Pair Corralation between Utilities Portfolio and Zevenbergen Growth

Assuming the 90 days horizon Utilities Portfolio is expected to generate 2.65 times less return on investment than Zevenbergen Growth. But when comparing it to its historical volatility, Utilities Portfolio Utilities is 1.05 times less risky than Zevenbergen Growth. It trades about 0.1 of its potential returns per unit of risk. Zevenbergen Growth Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,399  in Zevenbergen Growth Fund on September 12, 2024 and sell it today you would earn a total of  706.00  from holding Zevenbergen Growth Fund or generate 20.77% return on investment over 90 days.

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

Utilities Portfolio Utilities  vs.  Zevenbergen Growth Fund

Utilities Portfolio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Portfolio Utilities are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Utilities Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zevenbergen Growth

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zevenbergen Growth Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Zevenbergen Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Utilities Portfolio and Zevenbergen Growth

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

The idea behind Utilities Portfolio Utilities and Zevenbergen Growth Fund 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.