Correlation Between The Gabelli and Federated Intermediate

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

Diversification Opportunities for The Gabelli and Federated Intermediate

0.08

Correlation Coefficient

The Gabelli  Federated Intermediate

Significant diversification

The 3 months correlation between The and Federated is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and Federated Intermediate Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate 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 Federated Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of The Gabelli i.e., The Gabelli and Federated Intermediate go up and down completely randomly.

Pair Corralation between The Gabelli and Federated Intermediate

Assuming the 90 days horizon The Gabelli Small is expected to generate 5.92 times more return on investment than Federated Intermediate. However, The Gabelli is 5.92 times more volatile than Federated Intermediate Porate. It trades about 0.07 of its potential returns per unit of risk. Federated Intermediate Porate is currently generating about -0.01 per unit of risk. If you would invest  4,483  in The Gabelli Small on September 3, 2024 and sell it today you would earn a total of  232.00  from holding The Gabelli Small or generate 5.18% return on investment over 90 days.

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

The Gabelli Small  vs.  Federated Intermediate Porate

Gabelli Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Federated Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Intermediate Porate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated Intermediate 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 Federated Intermediate

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

The idea behind The Gabelli Small and Federated Intermediate Porate 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.