06/26/2007 08:47 AM CDT Asked by PhilScim
interesting

01/27/2007 04:00 AM CST Asked by magician
I suppose that as a sector fund one shouldn't expect it to be particularly well diversified; it isn't. The average correlation of returns amongst the holdings is +52% over the last four years, +46% if you include cash in the portfolio

During the last four years, 8 of the 20 holdings - CNX, DO, NFX, BTU, ACI, MEE, HAL and BJS - have provided no useful diversification; i.e., any portfolio that contained any of these could be improved - less risk for the same return or more return for the same risk - by dropping these securities.

If the fund includes cash, the situation is even more severe: 12 of the 20 securities provided no useful diversification. Those that did are CNX, RIG, PXP, MEE, SNSA, SWN, OMM, and SLB.