Correlation Between The Gabelli and Disciplined Growth

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

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

Diversification Opportunities for The Gabelli and Disciplined Growth

0.67

Correlation Coefficient

The Gabelli  Disciplined Growth

Poor diversification

The 3 months correlation between The and Disciplined is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and Disciplined Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Growth 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 Small are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Growth has no effect on the direction of The Gabelli i.e., The Gabelli and Disciplined Growth go up and down completely randomly.

Pair Corralation between The Gabelli and Disciplined Growth

Assuming the 90 days horizon The Gabelli Small is expected to generate 0.7 times more return on investment than Disciplined Growth. However, The Gabelli Small is 1.43 times less risky than Disciplined Growth. It trades about -0.08 of its potential returns per unit of risk. Disciplined Growth Fund is currently generating about -0.09 per unit of risk. If you would invest  4,323  in The Gabelli Small on December 29, 2024 and sell it today you would lose (233.00) from holding The Gabelli Small or give up 5.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

The Gabelli Small  vs.  Disciplined Growth Fund

Gabelli Small

Risk-Adjusted Performance

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, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Disciplined Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Disciplined Growth Fund 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.

Pair Trading with The Gabelli and Disciplined Growth

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

The idea behind The Gabelli Small and Disciplined Growth Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.