Correlation Between Gabelli Equity and Miller Vertible

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

Diversification Opportunities for Gabelli Equity and Miller Vertible

0.6

Correlation Coefficient

Gabelli Equity  Miller Vertible

Poor diversification

The 3 months correlation between Gabelli and Miller is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Miller Vertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Vertible Bond 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 Miller Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Vertible Bond has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Miller Vertible go up and down completely randomly.

Pair Corralation between Gabelli Equity and Miller Vertible

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 2.58 times more return on investment than Miller Vertible. However, Gabelli Equity is 2.58 times more volatile than Miller Vertible Bond. It trades about 0.06 of its potential returns per unit of risk. Miller Vertible Bond is currently generating about -0.02 per unit of risk. If you would invest  525.00  in Gabelli Equity Trust on October 8, 2024 and sell it today you would earn a total of  17.00  from holding Gabelli Equity Trust or generate 3.24% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Miller Vertible Bond

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.

Miller Vertible Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miller Vertible Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Miller Vertible 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 Miller Vertible

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

The idea behind Gabelli Equity Trust and Miller Vertible Bond 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.