Correlation Between Gabelli Global and Dreyfus Natural

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

By analyzing existing cross correlation between Gabelli Global Financial and Dreyfus Natural Resources, you can compare the effects of market volatilities on Gabelli Global and Dreyfus Natural 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 Global with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Dreyfus Natural.

Diversification Opportunities for Gabelli Global and Dreyfus Natural

0.13

Correlation Coefficient

Gabelli Global  Dreyfus Natural

Average diversification

The 3 months correlation between Gabelli and DREYFUS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources and Gabelli Global 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 Gabelli Global Financial are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Gabelli Global i.e., Gabelli Global and Dreyfus Natural go up and down completely randomly.

Pair Corralation between Gabelli Global and Dreyfus Natural

Assuming the 90 days horizon Gabelli Global Financial is expected to generate 0.57 times more return on investment than Dreyfus Natural. However, Gabelli Global Financial is 1.74 times less risky than Dreyfus Natural. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.15 per unit of risk. If you would invest  1,514  in Gabelli Global Financial on October 3, 2024 and sell it today you would earn a total of  56.00  from holding Gabelli Global Financial or generate 3.7% return on investment over 90 days.

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

Gabelli Global Financial  vs.  Dreyfus Natural Resources

Gabelli Global Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Gabelli Global and Dreyfus Natural

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

The idea behind Gabelli Global Financial and Dreyfus Natural Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.