Correlation Between Gabelli Growth and Gabelli Value

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

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

Diversification Opportunities for Gabelli Growth and Gabelli Value

0.4

Correlation Coefficient

Gabelli Growth  Gabelli Value

Very weak diversification

The 3 months correlation between Gabelli and Gabelli is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Growth and The Gabelli Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Value and Gabelli Growth 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 Growth are associated (or correlated) with Gabelli Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Value has no effect on the direction of Gabelli Growth i.e., Gabelli Growth and Gabelli Value go up and down completely randomly.

Pair Corralation between Gabelli Growth and Gabelli Value

Assuming the 90 days horizon The Gabelli Growth is expected to under-perform the Gabelli Value. In addition to that, Gabelli Growth is 1.83 times more volatile than The Gabelli Value. It trades about -0.07 of its total potential returns per unit of risk. The Gabelli Value is currently generating about 0.12 per unit of volatility. If you would invest  984.00  in The Gabelli Value on December 28, 2024 and sell it today you would earn a total of  61.00  from holding The Gabelli Value or generate 6.2% return on investment over 90 days.

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

The Gabelli Growth  vs.  The Gabelli Value

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gabelli Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gabelli Growth and Gabelli Value

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

The idea behind The Gabelli Growth and The Gabelli Value 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.