Correlation Between Federated Premier and Gabelli Utility

Can any of the company-specific risk be diversified away by investing in both Federated Premier and Gabelli Utility 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 Utility 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 Utility Closed, you can compare the effects of market volatilities on Federated Premier and Gabelli Utility 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 Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Gabelli Utility.

Diversification Opportunities for Federated Premier and Gabelli Utility

0.53

Correlation Coefficient

Federated Premier  Gabelli Utility

Very weak diversification

The 3 months correlation between Federated and Gabelli is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed 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 Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Federated Premier i.e., Federated Premier and Gabelli Utility go up and down completely randomly.

Pair Corralation between Federated Premier and Gabelli Utility

Considering the 90-day investment horizon Federated Premier is expected to generate 13.6 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Federated Premier Municipal is 1.66 times less risky than Gabelli Utility. It trades about 0.02 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Gabelli Utility Closed on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Gabelli Utility Closed or generate 7.63% 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 Utility Closed

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 current stock price disarray, may contribute to short-term losses for the investors.

Gabelli Utility Closed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively abnormal basic indicators, Gabelli Utility may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Federated Premier and Gabelli Utility

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

The idea behind Federated Premier Municipal and Gabelli Utility Closed 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.