Correlation Between Gabelli Equity and Columbia Moderate

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

Diversification Opportunities for Gabelli Equity and Columbia Moderate

0.83

Correlation Coefficient

Gabelli Equity  Columbia Moderate

Very poor diversification

The 3 months correlation between Gabelli and Columbia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Columbia Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Moderate Growth 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 Columbia Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Moderate Growth has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Columbia Moderate go up and down completely randomly.

Pair Corralation between Gabelli Equity and Columbia Moderate

Considering the 90-day investment horizon Gabelli Equity Trust is expected to under-perform the Columbia Moderate. In addition to that, Gabelli Equity is 1.88 times more volatile than Columbia Moderate Growth. It trades about -0.17 of its total potential returns per unit of risk. Columbia Moderate Growth is currently generating about -0.28 per unit of volatility. If you would invest  4,178  in Columbia Moderate Growth on October 8, 2024 and sell it today you would lose (142.00) from holding Columbia Moderate Growth or give up 3.4% of portfolio value over 90 days.

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

Gabelli Equity Trust  vs.  Columbia Moderate Growth

Gabelli Equity Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 4 (%) 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.

Columbia Moderate Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Moderate Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Columbia Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Equity and Columbia Moderate

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

The idea behind Gabelli Equity Trust and Columbia Moderate Growth 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.