Correlation Between Gabelli Multimedia and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Gabelli Multimedia and Eaton Vance 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 Eaton Vance 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 Eaton Vance Tax, you can compare the effects of market volatilities on Gabelli Multimedia and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Multimedia and Eaton Vance.

Diversification Opportunities for Gabelli Multimedia and Eaton Vance

0.26

Correlation Coefficient

Gabelli Multimedia  Eaton Vance

Modest diversification

The 3 months correlation between Gabelli and Eaton is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and Eaton Vance go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Eaton Vance

Assuming the 90 days trading horizon The Gabelli Multimedia is expected to generate 0.5 times more return on investment than Eaton Vance. However, The Gabelli Multimedia is 2.02 times less risky than Eaton Vance. It trades about -0.03 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about -0.05 per unit of risk. If you would invest  2,270  in The Gabelli Multimedia on December 29, 2024 and sell it today you would lose (18.00) from holding The Gabelli Multimedia or give up 0.79% of portfolio value over 90 days.

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

The Gabelli Multimedia  vs.  Eaton Vance Tax

The Gabelli Multimedia

Risk-Adjusted Performance

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.

Eaton Vance Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Multimedia and Eaton Vance

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

The idea behind The Gabelli Multimedia and Eaton Vance Tax 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 Transaction History module to view history of all your transactions and understand their impact on performance.