Correlation Between Reaves Utility and Dnp Select

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

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

Diversification Opportunities for Reaves Utility and Dnp Select

0.84

Correlation Coefficient

Reaves Utility  Dnp Select

Very poor diversification

The 3 months correlation between Reaves and Dnp is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Reaves Utility If and Dnp Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dnp Select Income and Reaves Utility 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 Reaves Utility If are associated (or correlated) with Dnp Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dnp Select Income has no effect on the direction of Reaves Utility i.e., Reaves Utility and Dnp Select go up and down completely randomly.

Pair Corralation between Reaves Utility and Dnp Select

Considering the 90-day investment horizon Reaves Utility If is expected to under-perform the Dnp Select. In addition to that, Reaves Utility is 1.33 times more volatile than Dnp Select Income. It trades about -0.04 of its total potential returns per unit of risk. Dnp Select Income is currently generating about 0.01 per unit of volatility. If you would invest  947.00  in Dnp Select Income on November 28, 2024 and sell it today you would earn a total of  3.00  from holding Dnp Select Income or generate 0.32% return on investment over 90 days.

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

Reaves Utility If  vs.  Dnp Select Income

Reaves Utility If

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reaves Utility If has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Reaves Utility is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dnp Select Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dnp Select Income has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, Dnp Select is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Reaves Utility and Dnp Select

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

The idea behind Reaves Utility If and Dnp Select Income 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.