Correlation Between Gabelli Equity and State Street

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

Diversification Opportunities for Gabelli Equity and State Street

0.18

Correlation Coefficient

Gabelli Equity  State Street

Average diversification

The 3 months correlation between Gabelli and State is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and State Street go up and down completely randomly.

Pair Corralation between Gabelli Equity and State Street

Assuming the 90 days trading horizon The Gabelli Equity is expected to generate 0.62 times more return on investment than State Street. However, The Gabelli Equity is 1.62 times less risky than State Street. It trades about 0.04 of its potential returns per unit of risk. State Street is currently generating about -0.01 per unit of risk. If you would invest  2,095  in The Gabelli Equity on December 30, 2024 and sell it today you would earn a total of  23.00  from holding The Gabelli Equity or generate 1.1% return on investment over 90 days.

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

The Gabelli Equity  vs.  State Street

Gabelli Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 3 (%) 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.

State Street

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gabelli Equity and State Street

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

The idea behind The Gabelli Equity and State Street 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.