Correlation Between Blackrock International and The Gabelli

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

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

Diversification Opportunities for Blackrock International and The Gabelli

0.22

Correlation Coefficient

Blackrock International  The Gabelli

Modest diversification

The 3 months correlation between Blackrock and The is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and Blackrock International 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 Blackrock International Index 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 Growth has no effect on the direction of Blackrock International i.e., Blackrock International and The Gabelli go up and down completely randomly.

Pair Corralation between Blackrock International and The Gabelli

Assuming the 90 days horizon Blackrock International is expected to generate 2.6 times less return on investment than The Gabelli. But when comparing it to its historical volatility, Blackrock International Index is 1.46 times less risky than The Gabelli. It trades about 0.06 of its potential returns per unit of risk. The Gabelli Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,432  in The Gabelli Growth on November 20, 2024 and sell it today you would earn a total of  5,275  from holding The Gabelli Growth or generate 82.01% return on investment over 90 days.

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

Blackrock International Index  vs.  The Gabelli Growth

Blackrock International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock International Index are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental 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 Blackrock International and The Gabelli

The main advantage of trading using opposite Blackrock International and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock International 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 Blackrock International Index and The Gabelli Growth 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.