Correlation Between Gabelli Equity and Ishares Russell

Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Ishares Russell 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 Ishares Russell 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 Ishares Russell 1000, you can compare the effects of market volatilities on Gabelli Equity and Ishares Russell 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 Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Ishares Russell.

Diversification Opportunities for Gabelli Equity and Ishares Russell

0.89

Correlation Coefficient

Gabelli Equity  Ishares Russell

Very poor diversification

The 3 months correlation between Gabelli and Ishares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Ishares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 1000 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 Ishares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Russell 1000 has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Ishares Russell go up and down completely randomly.

Pair Corralation between Gabelli Equity and Ishares Russell

Considering the 90-day investment horizon Gabelli Equity is expected to generate 2.07 times less return on investment than Ishares Russell. In addition to that, Gabelli Equity is 1.16 times more volatile than Ishares Russell 1000. It trades about 0.05 of its total potential returns per unit of risk. Ishares Russell 1000 is currently generating about 0.11 per unit of volatility. If you would invest  2,987  in Ishares Russell 1000 on September 21, 2024 and sell it today you would earn a total of  1,668  from holding Ishares Russell 1000 or generate 55.84% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Ishares Russell 1000

Gabelli Equity Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabelli Equity Trust has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Gabelli Equity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ishares Russell 1000

Risk-Adjusted Performance

5 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Russell 1000 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ishares Russell 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 Ishares Russell

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

The idea behind Gabelli Equity Trust and Ishares Russell 1000 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.