Correlation Between Gabelli Equity and Utilities Fund

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

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

Diversification Opportunities for Gabelli Equity and Utilities Fund

0.6

Correlation Coefficient

Gabelli Equity  Utilities Fund

Poor diversification

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

Pair Corralation between Gabelli Equity and Utilities Fund

Assuming the 90 days horizon Gabelli Equity is expected to generate 2.92 times less return on investment than Utilities Fund. But when comparing it to its historical volatility, The Gabelli Equity is 1.29 times less risky than Utilities Fund. It trades about 0.05 of its potential returns per unit of risk. Utilities Fund Investor is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,415  in Utilities Fund Investor on October 7, 2024 and sell it today you would earn a total of  379.00  from holding Utilities Fund Investor or generate 26.78% return on investment over 90 days.

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

The Gabelli Equity  vs.  Utilities Fund Investor

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Utilities Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utilities Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Utilities 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 Equity and Utilities Fund

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

The idea behind The Gabelli Equity and Utilities Fund Investor 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.