Correlation Between Gabelli Equity and HYB

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

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

Diversification Opportunities for Gabelli Equity and HYB

0.16

Correlation Coefficient

Gabelli Equity  HYB

Average diversification

The 3 months correlation between Gabelli and HYB is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and HYB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYB and Gabelli Equity 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 The Gabelli Equity are associated (or correlated) with HYB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYB has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and HYB go up and down completely randomly.

Pair Corralation between Gabelli Equity and HYB

Assuming the 90 days trading horizon Gabelli Equity is expected to generate 1.86 times less return on investment than HYB. In addition to that, Gabelli Equity is 1.4 times more volatile than HYB. It trades about 0.03 of its total potential returns per unit of risk. HYB is currently generating about 0.08 per unit of volatility. If you would invest  812.00  in HYB on December 28, 2024 and sell it today you would earn a total of  8.00  from holding HYB or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.67%
Values	Daily Returns

The Gabelli Equity  vs.  HYB

Gabelli Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HYB

Risk-Adjusted Performance

Modest

Over the last 90 days HYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HYB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Equity and HYB

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

The idea behind The Gabelli Equity and HYB 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 Stocks Directory module to find actively traded stocks across global markets.