Utah Stock Index Research

Author: Kyler Zarate (QAMO ’25)
Publication Date: May, 2025.

This research brief introduces a new stock index based on a portfolio of 104 publicly traded companies headquartered in the state of Utah. The index provides a measure of the economic performance of public Utah companies over the past 30 years that is constructed to be comparable to the national benchmark Standard & Poor’s 500 Index. Over the past 10 years, Utah-based companies have outperformed the S&P 500 up to a sharp decline in 2024. Despite this, the index is showing a strong recovery consistent with the S&P 500.

A Stock Index

Stock indexes are often used to track the performance of a basket of companies intended to replicate a certain area of the stock market. Indexes can also serve as benchmarks to compare the performance of a relevant investment. A popular index is the Standard & Poor’s 500 Index or S&P 500, which tracks the performance of 500 of the largest (measured by market capitalization) publicly traded companies listed on United States stock exchanges. The S&P 500 has exposure to about 80% of the combined market capitalization in the U.S. stock market, which makes it useful as a proxy for the entire stock market.

The price of a stock index reflects investors’ sentiment about the index constituents’ financial status, such as earnings, growth, and the broader economy. A Utah-specific stock index can thus provide information about the relative strength of Utah’s businesses and economy.

Attempts to track performance of Utah companies have been made, with the Utah Focus Fund using stock-picking techniques and the Bloomberg Utah Index (BUTX) weighing by stock price and filtering only for 15 to 20 of the largest companies at a time. This index seeks to be more inclusive by allowing more companies and allocating funds to higher value companies.

Methodology

The goal of this analysis is to produce a value-weighted stock index specific to publicly traded companies headquartered in Utah. The index is constructed in a similar method used to construct the S&P 500 index. Specifically, the index weighs each company’s primary stock using its market capitalization relative to the total value of the Utah portfolio at a given time. Market capitalization represents the public value of a company (or the value of all a company’s outstanding shares on a given day). Historical stock prices, outstanding shares, and other company-specific information were retrieved from the Center for Security Prices and Compustat databases provided by the Wharton Research Data Services. Utah companies are identified by the location of their headquarters. The portfolio of companies was run through a simulation assuming an investment starting in 1995. To make an investment in Utah stocks more realistic, the value-weighting was adjusted quarterly to account for changes in each company’s value. Stock events such as dividend and cash payments to shareholders were accounted for in the simulation, as well as additions and deletions to the portfolio (e.g. when new companies are formed, merge with other companies, or go out of business). The daily return was estimated using the appreciation or depreciation of the stock’s price and any dividend or cash payments to shareholders.

The index thus provides information on the total return of Utah stocks over the past 30 years, which can be compared to benchmark indexes such as the S&P 500 and BUTX. Additional measures such as beta, alpha, and the standard deviation of the portfolio can be used to evaluate performance and risk over time.

Notable Companies

With 104 companies from 1995 to 2025, there is an average of 35 companies present in the index at a given time. Notable companies present throughout the entirety of the index include Zion’s Bancorporation National Association, Franklin Covey Co., Utah Medical Products Inc, Security National Financial Corp, PROG Holdings, Merit Medical Systems Inc, and SkyWest Inc. Companies representing a large proportion of the index during their time spent in the index include American Stores Co., Novell Inc., Extra Space Storage Inc, Questar Corp, and Nu Skin Enterprises Inc. While a wide variety of industries were represented throughout the index, sectors such as Healthcare, Financials, and Consumer Staples tended to have the largest proportions of companies. Figure 1 shows the top 10 companies ranked by average market capitalization while present in the index, with values ranging from about $3 billion to $10 billion on average.

Figure 1. Top 10 companies ranked by average market capitalization

Performance

Figure 2 compares the total return of the Utah Stock Index to the S&P 500 and BUTX. Each index is indexed to zero in 1995, and the figure presents the cumulative percentage change for each index. While the Utah index shows notable increases and dips from year to year, the cumulative performance of Utah stocks was somewhat consistent with the S&P 500. By March 2025, the Utah Stock Index outperformed BUTX with a total return of 868% compared to 399%. Meanwhile, the index fell short of the S&P 500 with a total return of 1036%. This underperformance relative to the S&P 500 seems to be a recent event as of the end of 2024, with the index outperforming the stock market steadily since 2008.

Utah’s resilience can be seen with the index having periods of smaller declines relative to systemic declines such as the 2001 Dot-Com Bubble, the 2008 Global Financial Crisis, and the 2020 COVID-19 Pandemic. From 2020 to 2022, a combination of introducing high-growth technology companies (such as Weave Communications, Qualtrics XM, and Finwise Bancorporation) and strong performance from large companies (such as Extra Space Storage Inc and other healthcare companies) showed a strong recovery from the pandemic. However, this growth declined in the latter half of 2022, with a small recession and downturn of the stock market having a large impact on Utah. As 2025 carries on, the performance of the Utah Stock Index shows strong recovery again at similar rates to the S&P 500.

Figure 2. Cumulative returns comparison of Utah Stock Index, S&P 500, and BUTX

Volatility

Figure 3 shows further exploration into the relationship between the changes in the Utah Stock Index and the S&P 500, with a linear regression using the Capital Asset Pricing Model being used to measure volatility (beta), excess return (alpha), and overall fit (r-square). The overall volatility of index returns compared to the S&P 500 was measured to be about 1.0235, suggesting the returns of Utah companies tend to change similarly with fluctuations in the stock market. Excess returns accounting for both market and U.S. 3-month Treasury Bills, a proxy for risk-free returns, were found to be very close to zero, suggesting that the index generated little average return on top of the market and other investments. The fit of the relationship was found to be a somewhat strong and positive relationship, with 62.2% of the changes in returns on the index explained by the stock market. This suggests that there are factors independent of events affecting the stock market that are driving the performance of Utah companies.

Figure 3. Linear regression of Utah Stock Index vs S&P 500 returns

Conclusion

While the Utah Stock Index did not outperform the S&P 500 over the 30-year horizon, the index still proved to track closely to the stock market. Utah also demonstrated resilience, especially during events that affect the entire market. Furthermore, the index outperformed the Bloomberg Utah Index consistently, which may be attributed to the increased industry exposure allowing for diversification, the increased number of companies reducing the impact of others, and the
value-weighting method allowing for larger companies to provide stability.

For a detailed technical description of the creation of the index and further information such as weights, company counts, industry shares, returns over different investment periods, state by state comparisons, and more, please see the Utah Stock Market Index Technical Brief.