Correlation Between Gabelli Equity and BlackRock Income

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

Diversification Opportunities for Gabelli Equity and BlackRock Income

0.35

Correlation Coefficient

Gabelli Equity  BlackRock Income

Weak diversification

The 3 months correlation between Gabelli and BlackRock is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and BlackRock Income Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Income Closed 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 BlackRock Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Income Closed has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and BlackRock Income go up and down completely randomly.

Pair Corralation between Gabelli Equity and BlackRock Income

Assuming the 90 days trading horizon Gabelli Equity is expected to generate 5.66 times less return on investment than BlackRock Income. But when comparing it to its historical volatility, The Gabelli Equity is 1.13 times less risky than BlackRock Income. It trades about 0.03 of its potential returns per unit of risk. BlackRock Income Closed is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,124  in BlackRock Income Closed on December 30, 2024 and sell it today you would earn a total of  53.00  from holding BlackRock Income Closed or generate 4.72% return on investment over 90 days.

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

The Gabelli Equity  vs.  BlackRock Income Closed

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 fairly strong fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

BlackRock Income Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Income Closed are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, BlackRock Income is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gabelli Equity and BlackRock Income

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

The idea behind The Gabelli Equity and BlackRock Income 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.