Correlation Between Bancroft Fund and Gabelli Multimedia

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

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

Diversification Opportunities for Bancroft Fund and Gabelli Multimedia

0.49

Correlation Coefficient

Bancroft Fund  Gabelli Multimedia

Very weak diversification

The 3 months correlation between Bancroft and Gabelli is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bancroft Fund and The Gabelli Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Multimedia and Bancroft Fund 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 Bancroft Fund are associated (or correlated) with Gabelli Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Multimedia has no effect on the direction of Bancroft Fund i.e., Bancroft Fund and Gabelli Multimedia go up and down completely randomly.

Pair Corralation between Bancroft Fund and Gabelli Multimedia

Assuming the 90 days trading horizon Bancroft Fund is expected to under-perform the Gabelli Multimedia. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bancroft Fund is 1.18 times less risky than Gabelli Multimedia. The preferred stock trades about -0.16 of its potential returns per unit of risk. The The Gabelli Multimedia is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,391  in The Gabelli Multimedia on October 20, 2024 and sell it today you would lose (106.00) from holding The Gabelli Multimedia or give up 4.43% of portfolio value over 90 days.

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

Bancroft Fund  vs.  The Gabelli Multimedia

Bancroft Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bancroft Fund has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bancroft Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Gabelli Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bancroft Fund and Gabelli Multimedia

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

The idea behind Bancroft Fund and The Gabelli Multimedia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.