Correlation Between Gabelli Global and Fundamental Large

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

Diversification Opportunities for Gabelli Global and Fundamental Large

-0.2

Correlation Coefficient

Gabelli Global  Fundamental Large

Good diversification

The 3 months correlation between Gabelli and Fundamental is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and Fundamental Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Large Cap 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 Fundamental Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Large Cap has no effect on the direction of Gabelli Global i.e., Gabelli Global and Fundamental Large go up and down completely randomly.

Pair Corralation between Gabelli Global and Fundamental Large

Assuming the 90 days horizon Gabelli Global Financial is expected to generate 0.95 times more return on investment than Fundamental Large. However, Gabelli Global Financial is 1.05 times less risky than Fundamental Large. It trades about 0.11 of its potential returns per unit of risk. Fundamental Large Cap is currently generating about -0.09 per unit of risk. If you would invest  1,560  in Gabelli Global Financial on December 23, 2024 and sell it today you would earn a total of  103.00  from holding Gabelli Global Financial or generate 6.6% return on investment over 90 days.

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

Gabelli Global Financial  vs.  Fundamental Large Cap

Gabelli Global Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fundamental Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fundamental Large 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 Global and Fundamental Large

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

The idea behind Gabelli Global Financial and Fundamental Large Cap 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.