Correlation Between Gamco International and Gabelli Growth

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

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

Diversification Opportunities for Gamco International and Gabelli Growth

-0.6

Correlation Coefficient

Gamco International  Gabelli Growth

Excellent diversification

The 3 months correlation between Gamco and Gabelli is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gamco International Growth and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and Gamco International 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 Gamco International Growth are associated (or correlated) with Gabelli Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of Gamco International i.e., Gamco International and Gabelli Growth go up and down completely randomly.

Pair Corralation between Gamco International and Gabelli Growth

Assuming the 90 days horizon Gamco International is expected to generate 24.58 times less return on investment than Gabelli Growth. But when comparing it to its historical volatility, Gamco International Growth is 1.25 times less risky than Gabelli Growth. It trades about 0.01 of its potential returns per unit of risk. The Gabelli Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,906  in The Gabelli Growth on September 12, 2024 and sell it today you would earn a total of  4,183  from holding The Gabelli Growth or generate 52.91% return on investment over 90 days.

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

Gamco International Growth  vs.  The Gabelli Growth

Gamco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamco International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Gamco International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco International and Gabelli Growth

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

The idea behind Gamco International Growth and The Gabelli Growth 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.