Correlation Between Gabelli Equity and Gabelli Dividend

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

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

Diversification Opportunities for Gabelli Equity and Gabelli Dividend

0.95

Correlation Coefficient

Gabelli Equity  Gabelli Dividend

Almost no diversification

The 3 months correlation between Gabelli and Gabelli is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and The Gabelli Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Dividend and Gabelli Equity 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 Equity are associated (or correlated) with Gabelli Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Dividend has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Gabelli Dividend go up and down completely randomly.

Pair Corralation between Gabelli Equity and Gabelli Dividend

Assuming the 90 days horizon Gabelli Equity is expected to generate 1.05 times less return on investment than Gabelli Dividend. In addition to that, Gabelli Equity is 1.07 times more volatile than The Gabelli Dividend. It trades about 0.08 of its total potential returns per unit of risk. The Gabelli Dividend is currently generating about 0.09 per unit of volatility. If you would invest  1,719  in The Gabelli Dividend on September 13, 2024 and sell it today you would earn a total of  259.00  from holding The Gabelli Dividend or generate 15.07% return on investment over 90 days.

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

The Gabelli Equity  vs.  The Gabelli Dividend

Gabelli Equity

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gabelli Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Dividend are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Gabelli Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Equity and Gabelli Dividend

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

The idea behind The Gabelli Equity and The Gabelli Dividend 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.