Correlation Between Ab Servative and The Gabelli

Can any of the company-specific risk be diversified away by investing in both Ab Servative and The Gabelli 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 Ab Servative and The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Servative Wealth and The Gabelli Focus, you can compare the effects of market volatilities on Ab Servative and The Gabelli 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 Ab Servative with a short position of The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Servative and The Gabelli.

Diversification Opportunities for Ab Servative and The Gabelli

0.35

Correlation Coefficient

Ab Servative  The Gabelli

Weak diversification

The 3 months correlation between ABPYX and The is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ab Servative Wealth and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Ab Servative 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 Ab Servative Wealth are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Focus has no effect on the direction of Ab Servative i.e., Ab Servative and The Gabelli go up and down completely randomly.

Pair Corralation between Ab Servative and The Gabelli

Assuming the 90 days horizon Ab Servative is expected to generate 1.11 times less return on investment than The Gabelli. But when comparing it to its historical volatility, Ab Servative Wealth is 1.57 times less risky than The Gabelli. It trades about 0.06 of its potential returns per unit of risk. The Gabelli Focus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,515  in The Gabelli Focus on October 21, 2024 and sell it today you would earn a total of  291.00  from holding The Gabelli Focus or generate 19.21% return on investment over 90 days.

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

Ab Servative Wealth  vs.  The Gabelli Focus

Ab Servative Wealth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Servative Wealth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Servative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Focus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Servative and The Gabelli

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

The idea behind Ab Servative Wealth and The Gabelli Focus 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.