Correlation Between Federated Hermes and Gabelli Growth

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

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

Diversification Opportunities for Federated Hermes and Gabelli Growth

-0.64

Correlation Coefficient

Federated Hermes  Gabelli Growth

Excellent diversification

The 3 months correlation between Federated and Gabelli is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Inflation and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and Federated Hermes 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 Federated Hermes Inflation are associated (or correlated) with Gabelli Growth. 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 Federated Hermes i.e., Federated Hermes and Gabelli Growth go up and down completely randomly.

Pair Corralation between Federated Hermes and Gabelli Growth

Assuming the 90 days horizon Federated Hermes Inflation is expected to under-perform the Gabelli Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Hermes Inflation is 3.43 times less risky than Gabelli Growth. The mutual fund trades about -0.13 of its potential returns per unit of risk. The The Gabelli Growth is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  10,927  in The Gabelli Growth on September 14, 2024 and sell it today you would earn a total of  1,372  from holding The Gabelli Growth or generate 12.56% return on investment over 90 days.

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

Federated Hermes Inflation  vs.  The Gabelli Growth

Federated Hermes Inf

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gabelli Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federated Hermes and Gabelli Growth

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

The idea behind Federated Hermes Inflation 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.