Correlation Between Gabelli Global and Ridgeworth Innovative

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

Diversification Opportunities for Gabelli Global and Ridgeworth Innovative

0.73

Correlation Coefficient

Gabelli Global  Ridgeworth Innovative

Poor diversification

The 3 months correlation between Gabelli and Ridgeworth is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and Ridgeworth Innovative Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Innovative 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 Ridgeworth Innovative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Innovative has no effect on the direction of Gabelli Global i.e., Gabelli Global and Ridgeworth Innovative go up and down completely randomly.

Pair Corralation between Gabelli Global and Ridgeworth Innovative

Assuming the 90 days horizon Gabelli Global Financial is expected to generate 0.68 times more return on investment than Ridgeworth Innovative. However, Gabelli Global Financial is 1.48 times less risky than Ridgeworth Innovative. It trades about 0.25 of its potential returns per unit of risk. Ridgeworth Innovative Growth is currently generating about 0.02 per unit of risk. If you would invest  1,565  in Gabelli Global Financial on October 25, 2024 and sell it today you would earn a total of  74.00  from holding Gabelli Global Financial or generate 4.73% return on investment over 90 days.

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

Gabelli Global Financial  vs.  Ridgeworth Innovative Growth

Gabelli Global Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 10 (%) 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 February 2025.

Ridgeworth Innovative

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ridgeworth Innovative Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ridgeworth Innovative showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Global and Ridgeworth Innovative

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

The idea behind Gabelli Global Financial and Ridgeworth Innovative Growth 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.