Correlation Between The Gabelli and Gabelli Equity

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

Diversification Opportunities for The Gabelli and Gabelli Equity

0.23

Correlation Coefficient

The Gabelli  Gabelli Equity

Modest diversification

The 3 months correlation between The and Gabelli is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and Gabelli Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Income 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 Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity Income has no effect on the direction of The Gabelli i.e., The Gabelli and Gabelli Equity go up and down completely randomly.

Pair Corralation between The Gabelli and Gabelli Equity

Assuming the 90 days horizon The Gabelli Small is expected to under-perform the Gabelli Equity. In addition to that, The Gabelli is 1.27 times more volatile than Gabelli Equity Income. It trades about -0.06 of its total potential returns per unit of risk. Gabelli Equity Income is currently generating about 0.02 per unit of volatility. If you would invest  725.00  in Gabelli Equity Income on December 25, 2024 and sell it today you would earn a total of  4.00  from holding Gabelli Equity Income or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

The Gabelli Small  vs.  Gabelli Equity Income

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.

Gabelli Equity Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong 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.

Pair Trading with The Gabelli and Gabelli Equity

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

The idea behind The Gabelli Small and Gabelli Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.