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 Gabelli MultiMedia Mutual and Eaton Vance National, 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

0.52

Correlation Coefficient

Gabelli MultiMedia  Eaton Vance

Very weak diversification

The 3 months correlation between Gabelli and Eaton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli MultiMedia Mutual and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National 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 Gabelli MultiMedia Mutual 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 National 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

Considering the 90-day investment horizon Gabelli MultiMedia Mutual is expected to generate 2.56 times more return on investment than Eaton Vance. However, Gabelli MultiMedia is 2.56 times more volatile than Eaton Vance National. It trades about 0.02 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.04 per unit of risk. If you would invest  428.00  in Gabelli MultiMedia Mutual on December 2, 2024 and sell it today you would earn a total of  51.00  from holding Gabelli MultiMedia Mutual or generate 11.92% return on investment over 90 days.

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

Gabelli MultiMedia Mutual  vs.  Eaton Vance National

Gabelli MultiMedia Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli MultiMedia Mutual has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Gabelli MultiMedia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Eaton Vance National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 Gabelli MultiMedia Mutual and Eaton Vance National 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 Global Correlations module to find global opportunities by holding instruments from different markets.