Correlation Between Gabelli Utility and Bank of AmericaPFD SER B

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

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

Diversification Opportunities for Gabelli Utility and Bank of AmericaPFD SER B

-0.02

Correlation Coefficient

Gabelli Utility  Bank of AmericaPFD SER B

Good diversification

The 3 months correlation between Gabelli and Bank is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Utility and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of AmericaPFD SER B and Gabelli Utility 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 Utility are associated (or correlated) with Bank of AmericaPFD SER B . Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of AmericaPFD SER B has no effect on the direction of Gabelli Utility i.e., Gabelli Utility and Bank of AmericaPFD SER B go up and down completely randomly.

Pair Corralation between Gabelli Utility and Bank of AmericaPFD SER B

Assuming the 90 days trading horizon The Gabelli Utility is expected to generate 0.08 times more return on investment than Bank of AmericaPFD SER B . However, The Gabelli Utility is 12.25 times less risky than Bank of AmericaPFD SER B . It trades about 0.0 of its potential returns per unit of risk. Bank of America is currently generating about -0.02 per unit of risk. If you would invest  2,438  in The Gabelli Utility on December 4, 2024 and sell it today you would lose (3.00) from holding The Gabelli Utility or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

The Gabelli Utility  vs.  Bank of America

Gabelli Utility

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Utility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Utility is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of AmericaPFD SER B

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank of AmericaPFD SER B reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Utility and Bank of AmericaPFD SER B

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

The idea behind The Gabelli Utility and Bank of America 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.