Correlation Between Income Growth and Gabelli Dividend

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

By analyzing existing cross correlation between Income Growth Fund and Gabelli Dividend Income, you can compare the effects of market volatilities on Income Growth and Gabelli Dividend 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 Income Growth with a short position of Gabelli Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Gabelli Dividend.

Diversification Opportunities for Income Growth and Gabelli Dividend

0.77

Correlation Coefficient

Income Growth  Gabelli Dividend

Poor diversification

The 3 months correlation between Income and Gabelli is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Gabelli Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Dividend Income and Income Growth 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 Income Growth Fund are associated (or correlated) with Gabelli Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Dividend Income has no effect on the direction of Income Growth i.e., Income Growth and Gabelli Dividend go up and down completely randomly.

Pair Corralation between Income Growth and Gabelli Dividend

Assuming the 90 days horizon Income Growth is expected to generate 1.32 times less return on investment than Gabelli Dividend. But when comparing it to its historical volatility, Income Growth Fund is 1.1 times less risky than Gabelli Dividend. It trades about 0.06 of its potential returns per unit of risk. Gabelli Dividend Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,882  in Gabelli Dividend Income on November 20, 2024 and sell it today you would earn a total of  626.00  from holding Gabelli Dividend Income or generate 33.26% return on investment over 90 days.

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

Income Growth Fund  vs.  Gabelli Dividend Income

Income Growth

Risk-Adjusted Performance

Very Weak

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

Gabelli Dividend Income

Risk-Adjusted Performance

Modest

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

Pair Trading with Income Growth and Gabelli Dividend

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

The idea behind Income Growth Fund and Gabelli Dividend 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.