Correlation Between Burnham Holdings and Gabelli Equity

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

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

Diversification Opportunities for Burnham Holdings and Gabelli Equity

-0.86

Correlation Coefficient

Burnham Holdings  Gabelli Equity

Pay attention - limited upside

The 3 months correlation between Burnham and Gabelli is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Burnham Holdings PFD and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Burnham Holdings 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 Burnham Holdings PFD are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Burnham Holdings i.e., Burnham Holdings and Gabelli Equity go up and down completely randomly.

Pair Corralation between Burnham Holdings and Gabelli Equity

Assuming the 90 days horizon Burnham Holdings PFD is expected to generate 0.4 times more return on investment than Gabelli Equity. However, Burnham Holdings PFD is 2.53 times less risky than Gabelli Equity. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.02 per unit of risk. If you would invest  4,750  in Burnham Holdings PFD on October 11, 2024 and sell it today you would earn a total of  575.00  from holding Burnham Holdings PFD or generate 12.11% return on investment over 90 days.

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

Burnham Holdings PFD  vs.  The Gabelli Equity

Burnham Holdings PFD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings PFD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Burnham Holdings and Gabelli Equity

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

The idea behind Burnham Holdings PFD and The Gabelli Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.