Correlation Between Gabelli Equity and Central Securities

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

By analyzing existing cross correlation between Gabelli Equity Trust and Central Securities, you can compare the effects of market volatilities on Gabelli Equity and Central Securities 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 Central Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Central Securities.

Diversification Opportunities for Gabelli Equity and Central Securities

0.3

Correlation Coefficient

Gabelli Equity  Central Securities

Weak diversification

The 3 months correlation between Gabelli and Central is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Central Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Securities 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 Gabelli Equity Trust are associated (or correlated) with Central Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Securities has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Central Securities go up and down completely randomly.

Pair Corralation between Gabelli Equity and Central Securities

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 1.28 times more return on investment than Central Securities. However, Gabelli Equity is 1.28 times more volatile than Central Securities. It trades about 0.1 of its potential returns per unit of risk. Central Securities is currently generating about -0.02 per unit of risk. If you would invest  523.00  in Gabelli Equity Trust on December 28, 2024 and sell it today you would earn a total of  27.00  from holding Gabelli Equity Trust or generate 5.16% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Central Securities

Gabelli Equity Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Gabelli Equity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Central Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Central Securities 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 Central Securities

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

The idea behind Gabelli Equity Trust and Central Securities 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.