Correlation Between The Gabelli and Small Company

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

By analyzing existing cross correlation between The Gabelli Growth and Small Pany Value, you can compare the effects of market volatilities on The Gabelli and Small Company 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 Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gabelli and Small Company.

Diversification Opportunities for The Gabelli and Small Company

0.88

Correlation Coefficient

The Gabelli  Small Company

Very poor diversification

The 3 months correlation between The and Small is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Growth and Small Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Value 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 Growth are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Value has no effect on the direction of The Gabelli i.e., The Gabelli and Small Company go up and down completely randomly.

Pair Corralation between The Gabelli and Small Company

Assuming the 90 days horizon The Gabelli Growth is expected to under-perform the Small Company. In addition to that, The Gabelli is 1.38 times more volatile than Small Pany Value. It trades about -0.07 of its total potential returns per unit of risk. Small Pany Value is currently generating about -0.09 per unit of volatility. If you would invest  2,534  in Small Pany Value on December 27, 2024 and sell it today you would lose (159.00) from holding Small Pany Value or give up 6.27% of portfolio value over 90 days.

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

The Gabelli Growth  vs.  Small Pany Value

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Small Pany Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with The Gabelli and Small Company

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

The idea behind The Gabelli Growth and Small Pany Value 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.