Correlation Between Gabelli Equity and The Gabelli

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

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

Diversification Opportunities for Gabelli Equity and The Gabelli

0.67

Correlation Coefficient

Gabelli Equity  The Gabelli

Poor diversification

The 3 months correlation between Gabelli and The is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Income and The Gabelli Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Small 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 Gabelli Equity Income are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Small has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and The Gabelli go up and down completely randomly.

Pair Corralation between Gabelli Equity and The Gabelli

Assuming the 90 days horizon Gabelli Equity Income is expected to generate 0.55 times more return on investment than The Gabelli. However, Gabelli Equity Income is 1.82 times less risky than The Gabelli. It trades about 0.15 of its potential returns per unit of risk. The Gabelli Small is currently generating about 0.08 per unit of risk. If you would invest  738.00  in Gabelli Equity Income on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Gabelli Equity Income or generate 7.05% return on investment over 90 days.

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

Gabelli Equity Income  vs.  The Gabelli Small

Gabelli Equity Income

Risk-Adjusted Performance

11 of 100

Good

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

Gabelli Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, The Gabelli may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Equity and The Gabelli

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

The idea behind Gabelli Equity Income and The Gabelli Small 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.