Correlation Between Gabelli Multimedia and Pioneer Municipal

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

Diversification Opportunities for Gabelli Multimedia and Pioneer Municipal

-0.03

Correlation Coefficient

Gabelli Multimedia  Pioneer Municipal

Good diversification

The 3 months correlation between Gabelli and Pioneer is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and Pioneer Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Municipal High 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 Pioneer Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Municipal High has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and Pioneer Municipal go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Pioneer Municipal

Assuming the 90 days trading horizon Gabelli Multimedia is expected to generate 1.31 times less return on investment than Pioneer Municipal. But when comparing it to its historical volatility, The Gabelli Multimedia is 1.15 times less risky than Pioneer Municipal. It trades about 0.0 of its potential returns per unit of risk. Pioneer Municipal High is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  949.00  in Pioneer Municipal High on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Pioneer Municipal High or generate 0.0% return on investment over 90 days.

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

The Gabelli Multimedia  vs.  Pioneer Municipal High

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.

Pioneer Municipal High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Municipal High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Pioneer Municipal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Gabelli Multimedia and Pioneer Municipal

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

The idea behind The Gabelli Multimedia and Pioneer Municipal High 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.