Correlation Between The Gabelli and Gabelli Small

Can any of the company-specific risk be diversified away by investing in both The Gabelli and Gabelli Small 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 The Gabelli and Gabelli Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Gabelli Asset and The Gabelli Small, you can compare the effects of market volatilities on The Gabelli and Gabelli Small 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 The Gabelli with a short position of Gabelli Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gabelli and Gabelli Small.

Diversification Opportunities for The Gabelli and Gabelli Small

0.71

Correlation Coefficient

The Gabelli  Gabelli Small

Poor diversification

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

Pair Corralation between The Gabelli and Gabelli Small

Assuming the 90 days horizon The Gabelli Asset is expected to under-perform the Gabelli Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Asset is 1.13 times less risky than Gabelli Small. The mutual fund trades about -0.01 of its potential returns per unit of risk. The The Gabelli Small is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,947  in The Gabelli Small on October 9, 2024 and sell it today you would earn a total of  399.00  from holding The Gabelli Small or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

The Gabelli Asset  vs.  The Gabelli Small

Gabelli Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Gabelli Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with The Gabelli and Gabelli Small

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

The idea behind The Gabelli Asset and The Gabelli Small 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.