Correlation Between Gabelli Dividend and Gabelli Equity

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

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

Diversification Opportunities for Gabelli Dividend and Gabelli Equity

0.91

Correlation Coefficient

Gabelli Dividend  Gabelli Equity

Almost no diversification

The 3 months correlation between Gabelli and Gabelli is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Dividend Income and Gabelli Equity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Trust and Gabelli Dividend 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 Dividend Income are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity Trust has no effect on the direction of Gabelli Dividend i.e., Gabelli Dividend and Gabelli Equity go up and down completely randomly.

Pair Corralation between Gabelli Dividend and Gabelli Equity

Considering the 90-day investment horizon Gabelli Dividend Income is expected to under-perform the Gabelli Equity. But the fund apears to be less risky and, when comparing its historical volatility, Gabelli Dividend Income is 1.16 times less risky than Gabelli Equity. The fund trades about -0.05 of its potential returns per unit of risk. The Gabelli Equity Trust is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  564.00  in Gabelli Equity Trust on November 29, 2024 and sell it today you would lose (11.00) from holding Gabelli Equity Trust or give up 1.95% of portfolio value over 90 days.

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

Gabelli Dividend Income  vs.  Gabelli Equity Trust

Gabelli Dividend Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli Dividend Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable fundamental indicators, Gabelli Dividend is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gabelli Equity Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli Equity Trust has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Gabelli Equity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Dividend and Gabelli Equity

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

The idea behind Gabelli Dividend Income and Gabelli Equity Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.