Correlation Between Gabelli Small and The Gabelli

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

Diversification Opportunities for Gabelli Small and The Gabelli

0.82

Correlation Coefficient

Gabelli Small  The Gabelli

Very poor diversification

The 3 months correlation between Gabelli and The is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and The Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities and Gabelli Small 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Gabelli Small i.e., Gabelli Small and The Gabelli go up and down completely randomly.

Pair Corralation between Gabelli Small and The Gabelli

Assuming the 90 days horizon Gabelli Small is expected to generate 10.19 times less return on investment than The Gabelli. In addition to that, Gabelli Small is 1.52 times more volatile than The Gabelli Utilities. It trades about 0.01 of its total potential returns per unit of risk. The Gabelli Utilities is currently generating about 0.08 per unit of volatility. If you would invest  455.00  in The Gabelli Utilities on October 12, 2024 and sell it today you would earn a total of  55.00  from holding The Gabelli Utilities or generate 12.09% return on investment over 90 days.

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

The Gabelli Small  vs.  The Gabelli Utilities

Gabelli Small

Risk-Adjusted Performance

0 of 100

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 latest abnormal 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.

Gabelli Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Utilities 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.

Pair Trading with Gabelli Small and The Gabelli

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

The idea behind The Gabelli Small and The Gabelli Utilities 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.