Correlation Between Gabelli Utility and Western Asset

Can any of the company-specific risk be diversified away by investing in both Gabelli Utility and Western Asset 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 Western Asset 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 Western Asset Managed, you can compare the effects of market volatilities on Gabelli Utility and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Utility and Western Asset.

Diversification Opportunities for Gabelli Utility and Western Asset

0.61

Correlation Coefficient

Gabelli Utility  Western Asset

Poor diversification

The 3 months correlation between Gabelli and Western is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Utility Closed and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Managed has no effect on the direction of Gabelli Utility i.e., Gabelli Utility and Western Asset go up and down completely randomly.

Pair Corralation between Gabelli Utility and Western Asset

Considering the 90-day investment horizon Gabelli Utility Closed is expected to generate 1.67 times more return on investment than Western Asset. However, Gabelli Utility is 1.67 times more volatile than Western Asset Managed. It trades about 0.14 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.06 per unit of risk. If you would invest  498.00  in Gabelli Utility Closed on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Gabelli Utility Closed or generate 8.23% return on investment over 90 days.

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

Gabelli Utility Closed  vs.  Western Asset Managed

Gabelli Utility Closed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 11 (%) 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.

Western Asset Managed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Managed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gabelli Utility and Western Asset

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

The idea behind Gabelli Utility Closed and Western Asset Managed 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.