Correlation Between Gabelli Asset and Muhlenkamp Fund

Can any of the company-specific risk be diversified away by investing in both Gabelli Asset and Muhlenkamp Fund 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 Asset and Muhlenkamp Fund 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 Muhlenkamp Fund Institutional, you can compare the effects of market volatilities on Gabelli Asset and Muhlenkamp Fund 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 Asset with a short position of Muhlenkamp Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Asset and Muhlenkamp Fund.

Diversification Opportunities for Gabelli Asset and Muhlenkamp Fund

0.87

Correlation Coefficient

Gabelli Asset  Muhlenkamp Fund

Very poor diversification

The 3 months correlation between Gabelli and Muhlenkamp is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Asset and Muhlenkamp Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muhlenkamp Fund Inst and Gabelli Asset 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 Muhlenkamp Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muhlenkamp Fund Inst has no effect on the direction of Gabelli Asset i.e., Gabelli Asset and Muhlenkamp Fund go up and down completely randomly.

Pair Corralation between Gabelli Asset and Muhlenkamp Fund

Assuming the 90 days horizon The Gabelli Asset is expected to generate 0.95 times more return on investment than Muhlenkamp Fund. However, The Gabelli Asset is 1.05 times less risky than Muhlenkamp Fund. It trades about 0.11 of its potential returns per unit of risk. Muhlenkamp Fund Institutional is currently generating about 0.06 per unit of risk. If you would invest  5,239  in The Gabelli Asset on September 15, 2024 and sell it today you would earn a total of  233.00  from holding The Gabelli Asset or generate 4.45% return on investment over 90 days.

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

The Gabelli Asset  vs.  Muhlenkamp Fund Institutional

Gabelli Asset

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Asset are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Muhlenkamp Fund Inst

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Muhlenkamp Fund Institutional are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Muhlenkamp Fund 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 Asset and Muhlenkamp Fund

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

The idea behind The Gabelli Asset and Muhlenkamp Fund Institutional 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.