Correlation Between Gabelli Global and Gabelli Utility

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

By analyzing existing cross correlation between Gabelli Global Small and Gabelli Utility Closed, you can compare the effects of market volatilities on Gabelli Global and Gabelli Utility 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 Global with a short position of Gabelli Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Gabelli Utility.

Diversification Opportunities for Gabelli Global and Gabelli Utility

0.7

Correlation Coefficient

Gabelli Global  Gabelli Utility

Poor diversification

The 3 months correlation between Gabelli and Gabelli is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Small and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed and Gabelli Global 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 Global Small are associated (or correlated) with Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Gabelli Global i.e., Gabelli Global and Gabelli Utility go up and down completely randomly.

Pair Corralation between Gabelli Global and Gabelli Utility

Considering the 90-day investment horizon Gabelli Global is expected to generate 1.51 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Gabelli Global Small is 1.16 times less risky than Gabelli Utility. It trades about 0.1 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Gabelli Utility Closed on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Gabelli Utility Closed or generate 7.63% return on investment over 90 days.

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

Gabelli Global Small  vs.  Gabelli Utility Closed

Gabelli Global Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Small are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gabelli Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Utility Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively abnormal basic indicators, Gabelli Utility may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gabelli Global and Gabelli Utility

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

The idea behind Gabelli Global Small and Gabelli Utility Closed 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.