Correlation Between Ab Global and Gabelli Utilities

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

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

Diversification Opportunities for Ab Global and Gabelli Utilities

0.39

Correlation Coefficient

Ab Global  Gabelli Utilities

Weak diversification

The 3 months correlation between ANAZX and Gabelli is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities and Ab Global 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 Global Bond are associated (or correlated) with Gabelli Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Ab Global i.e., Ab Global and Gabelli Utilities go up and down completely randomly.

Pair Corralation between Ab Global and Gabelli Utilities

Assuming the 90 days horizon Ab Global Bond is expected to generate 0.32 times more return on investment than Gabelli Utilities. However, Ab Global Bond is 3.09 times less risky than Gabelli Utilities. It trades about 0.04 of its potential returns per unit of risk. Gabelli Utilities is currently generating about -0.01 per unit of risk. If you would invest  644.00  in Ab Global Bond on October 11, 2024 and sell it today you would earn a total of  39.00  from holding Ab Global Bond or generate 6.06% return on investment over 90 days.

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

Ab Global Bond  vs.  Gabelli Utilities

Ab Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gabelli Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabelli Utilities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ab Global and Gabelli Utilities

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

The idea behind Ab Global Bond and Gabelli Utilities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.