Correlation Between Federated Premier and Gabelli Global

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

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

Diversification Opportunities for Federated Premier and Gabelli Global

0.56

Correlation Coefficient

Federated Premier  Gabelli Global

Very weak diversification

The 3 months correlation between Federated and Gabelli is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Gabelli Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Small and Federated Premier 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 Premier Municipal are associated (or correlated) with Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Small has no effect on the direction of Federated Premier i.e., Federated Premier and Gabelli Global go up and down completely randomly.

Pair Corralation between Federated Premier and Gabelli Global

Considering the 90-day investment horizon Federated Premier is expected to generate 8.95 times less return on investment than Gabelli Global. But when comparing it to its historical volatility, Federated Premier Municipal is 1.42 times less risky than Gabelli Global. It trades about 0.02 of its potential returns per unit of risk. Gabelli Global Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,149  in Gabelli Global Small on December 30, 2024 and sell it today you would earn a total of  57.00  from holding Gabelli Global Small or generate 4.96% return on investment over 90 days.

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

Federated Premier Municipal  vs.  Gabelli Global Small

Federated Premier

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Premier Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gabelli Global Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Small are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gabelli Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Premier and Gabelli Global

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

The idea behind Federated Premier Municipal and Gabelli Global Small 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.