Correlation Between Gabelli Equity and Vanguard Growth

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

Diversification Opportunities for Gabelli Equity and Vanguard Growth

0.71

Correlation Coefficient

Gabelli Equity  Vanguard Growth

Poor diversification

The 3 months correlation between Gabelli and Vanguard is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Vanguard Growth go up and down completely randomly.

Pair Corralation between Gabelli Equity and Vanguard Growth

Considering the 90-day investment horizon Gabelli Equity Trust is expected to under-perform the Vanguard Growth. But the fund apears to be less risky and, when comparing its historical volatility, Gabelli Equity Trust is 1.13 times less risky than Vanguard Growth. The fund trades about -0.16 of its potential returns per unit of risk. The Vanguard Growth Index is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  21,610  in Vanguard Growth Index on October 11, 2024 and sell it today you would lose (309.00) from holding Vanguard Growth Index or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Gabelli Equity Trust  vs.  Vanguard Growth Index

Gabelli Equity Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 2 (%) 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.

Vanguard Growth Index

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gabelli Equity and Vanguard Growth

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

The idea behind Gabelli Equity Trust and Vanguard Growth Index 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.