Correlation Between Gabelli Multimedia and Alliancebernstein

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

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

Diversification Opportunities for Gabelli Multimedia and Alliancebernstein

0.61

Correlation Coefficient

Gabelli Multimedia  Alliancebernstein

Poor diversification

The 3 months correlation between Gabelli and Alliancebernstein is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and Alliancebernstein National Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Gabelli Multimedia 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 Multimedia are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and Alliancebernstein go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Alliancebernstein

Assuming the 90 days trading horizon The Gabelli Multimedia is expected to generate 1.11 times more return on investment than Alliancebernstein. However, Gabelli Multimedia is 1.11 times more volatile than Alliancebernstein National Municipal. It trades about -0.06 of its potential returns per unit of risk. Alliancebernstein National Municipal is currently generating about -0.14 per unit of risk. If you would invest  2,376  in The Gabelli Multimedia on October 7, 2024 and sell it today you would lose (73.00) from holding The Gabelli Multimedia or give up 3.07% of portfolio value over 90 days.

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

The Gabelli Multimedia  vs.  Alliancebernstein National Mun

The Gabelli Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Multimedia and Alliancebernstein

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

The idea behind The Gabelli Multimedia and Alliancebernstein National Municipal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.