Correlation Between Avantis Us and The Gabelli

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

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

Diversification Opportunities for Avantis Us and The Gabelli

0.82

Correlation Coefficient

Avantis Us  The Gabelli

Very poor diversification

The 3 months correlation between Avantis and The is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Avantis Us 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 Avantis Large Cap 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 Avantis Us i.e., Avantis Us and The Gabelli go up and down completely randomly.

Pair Corralation between Avantis Us and The Gabelli

Assuming the 90 days horizon Avantis Large Cap is expected to generate 1.22 times more return on investment than The Gabelli. However, Avantis Us is 1.22 times more volatile than The Gabelli Focus. It trades about 0.24 of its potential returns per unit of risk. The Gabelli Focus is currently generating about 0.21 per unit of risk. If you would invest  1,359  in Avantis Large Cap on September 5, 2024 and sell it today you would earn a total of  175.00  from holding Avantis Large Cap or generate 12.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Avantis Large Cap  vs.  The Gabelli Focus

Avantis Large Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Large Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Avantis Us may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gabelli Focus

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, The Gabelli may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avantis Us and The Gabelli

The main advantage of trading using opposite Avantis Us and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Us 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 Avantis Large Cap 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.