Correlation Between Gabelli Multimedia and GAMCO Global

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

Diversification Opportunities for Gabelli Multimedia and GAMCO Global

0.8

Correlation Coefficient

Gabelli Multimedia  GAMCO Global

Very poor diversification

The 3 months correlation between Gabelli and GAMCO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold 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 GAMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Global Gold has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and GAMCO Global go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and GAMCO Global

Assuming the 90 days trading horizon The Gabelli Multimedia is expected to generate 0.58 times more return on investment than GAMCO Global. However, The Gabelli Multimedia is 1.74 times less risky than GAMCO Global. It trades about 0.0 of its potential returns per unit of risk. GAMCO Global Gold is currently generating about -0.27 per unit of risk. If you would invest  2,290  in The Gabelli Multimedia on September 23, 2024 and sell it today you would earn a total of  0.00  from holding The Gabelli Multimedia or generate 0.0% return on investment over 90 days.

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

The Gabelli Multimedia  vs.  GAMCO Global Gold

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.

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gabelli Multimedia and GAMCO Global

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

The idea behind The Gabelli Multimedia and GAMCO Global Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.