Correlation Between Gabelli Utility and China Fund

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

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

Diversification Opportunities for Gabelli Utility and China Fund

-0.6

Correlation Coefficient

Gabelli Utility  China Fund

Excellent diversification

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

Pair Corralation between Gabelli Utility and China Fund

Considering the 90-day investment horizon Gabelli Utility Closed is expected to generate 0.61 times more return on investment than China Fund. However, Gabelli Utility Closed is 1.65 times less risky than China Fund. It trades about 0.27 of its potential returns per unit of risk. China Fund is currently generating about -0.02 per unit of risk. If you would invest  501.00  in Gabelli Utility Closed on September 12, 2024 and sell it today you would earn a total of  40.00  from holding Gabelli Utility Closed or generate 7.98% return on investment over 90 days.

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

Gabelli Utility Closed  vs.  China Fund

Gabelli Utility Closed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Gabelli Utility is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

China Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady technical indicators, China Fund displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Utility and China Fund

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

The idea behind Gabelli Utility Closed and China Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.