Correlation Between UTI Asset and Investment Trust

Can any of the company-specific risk be diversified away by investing in both UTI Asset and Investment Trust 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 UTI Asset and Investment Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UTI Asset Management and The Investment Trust, you can compare the effects of market volatilities on UTI Asset and Investment Trust 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 UTI Asset with a short position of Investment Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTI Asset and Investment Trust.

Diversification Opportunities for UTI Asset and Investment Trust

0.27

Correlation Coefficient

UTI Asset  Investment Trust

Modest diversification

The 3 months correlation between UTI and Investment is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust and UTI Asset 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 UTI Asset Management are associated (or correlated) with Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of UTI Asset i.e., UTI Asset and Investment Trust go up and down completely randomly.

Pair Corralation between UTI Asset and Investment Trust

Assuming the 90 days trading horizon UTI Asset is expected to generate 1.55 times less return on investment than Investment Trust. But when comparing it to its historical volatility, UTI Asset Management is 1.12 times less risky than Investment Trust. It trades about 0.06 of its potential returns per unit of risk. The Investment Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,600  in The Investment Trust on September 13, 2024 and sell it today you would earn a total of  2,533  from holding The Investment Trust or generate 13.62% return on investment over 90 days.

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

UTI Asset Management  vs.  The Investment Trust

UTI Asset Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, UTI Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Investment Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Investment Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UTI Asset and Investment Trust

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

The idea behind UTI Asset Management and The Investment Trust 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.