Correlation Between Gabelli Equity and Value Line

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

Diversification Opportunities for Gabelli Equity and Value Line

0.49

Correlation Coefficient

Gabelli Equity  Value Line

Very weak diversification

The 3 months correlation between Gabelli and Value is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Value Line Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Income 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Income has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Value Line go up and down completely randomly.

Pair Corralation between Gabelli Equity and Value Line

Assuming the 90 days horizon Gabelli Equity is expected to generate 1.52 times less return on investment than Value Line. But when comparing it to its historical volatility, The Gabelli Equity is 1.18 times less risky than Value Line. It trades about 0.06 of its potential returns per unit of risk. Value Line Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,181  in Value Line Income on October 7, 2024 and sell it today you would earn a total of  108.00  from holding Value Line Income or generate 9.14% return on investment over 90 days.

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

The Gabelli Equity  vs.  Value Line Income

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.

Value Line Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Value Line may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gabelli Equity and Value Line

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

The idea behind The Gabelli Equity and Value Line Income 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.