Correlation Between Gabelli Healthcare and Gabelli Global

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

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

Diversification Opportunities for Gabelli Healthcare and Gabelli Global

0.76

Correlation Coefficient

Gabelli Healthcare  Gabelli Global

Poor diversification

The 3 months correlation between Gabelli and Gabelli is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Healthcare WellnessRx and Gabelli Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Small and Gabelli Healthcare 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 Healthcare WellnessRx are associated (or correlated) with Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Small has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Gabelli Global go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Gabelli Global

Considering the 90-day investment horizon Gabelli Healthcare WellnessRx is expected to generate 0.88 times more return on investment than Gabelli Global. However, Gabelli Healthcare WellnessRx is 1.14 times less risky than Gabelli Global. It trades about -0.06 of its potential returns per unit of risk. Gabelli Global Small is currently generating about -0.07 per unit of risk. If you would invest  1,027  in Gabelli Healthcare WellnessRx on November 29, 2024 and sell it today you would lose (28.00) from holding Gabelli Healthcare WellnessRx or give up 2.73% of portfolio value over 90 days.

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

Gabelli Healthcare WellnessRx  vs.  Gabelli Global Small

Gabelli Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli Healthcare WellnessRx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gabelli Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Global Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli Global Small has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Gabelli Healthcare and Gabelli Global

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

The idea behind Gabelli Healthcare WellnessRx and Gabelli Global Small 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.