Correlation Between Gabelli Equity and Templeton Emerging

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

Diversification Opportunities for Gabelli Equity and Templeton Emerging

-0.58

Correlation Coefficient

Gabelli Equity  Templeton Emerging

Excellent diversification

The 3 months correlation between Gabelli and Templeton is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Templeton Emerging go up and down completely randomly.

Pair Corralation between Gabelli Equity and Templeton Emerging

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 0.9 times more return on investment than Templeton Emerging. However, Gabelli Equity Trust is 1.11 times less risky than Templeton Emerging. It trades about 0.04 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  457.00  in Gabelli Equity Trust on October 7, 2024 and sell it today you would earn a total of  85.00  from holding Gabelli Equity Trust or generate 18.6% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Templeton Emerging Markets

Gabelli Equity Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 5 (%) 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.

Templeton Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite latest inconsistent performance, the Fund's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with Gabelli Equity and Templeton Emerging

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

The idea behind Gabelli Equity Trust and Templeton Emerging Markets 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.