Correlation Between Gabelli Utilities and Consolidated Edison

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

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

Diversification Opportunities for Gabelli Utilities and Consolidated Edison

0.79

Correlation Coefficient

Gabelli Utilities  Consolidated Edison

Poor diversification

The 3 months correlation between Gabelli and Consolidated is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Utilities and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and Gabelli Utilities 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 Utilities are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Gabelli Utilities i.e., Gabelli Utilities and Consolidated Edison go up and down completely randomly.

Pair Corralation between Gabelli Utilities and Consolidated Edison

Assuming the 90 days horizon Gabelli Utilities is expected to generate 1.0 times more return on investment than Consolidated Edison. However, Gabelli Utilities is 1.0 times less risky than Consolidated Edison. It trades about -0.14 of its potential returns per unit of risk. Consolidated Edison is currently generating about -0.18 per unit of risk. If you would invest  599.00  in Gabelli Utilities on October 5, 2024 and sell it today you would lose (51.00) from holding Gabelli Utilities or give up 8.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Gabelli Utilities  vs.  Consolidated Edison

Gabelli Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabelli Utilities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Consolidated Edison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Edison has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gabelli Utilities and Consolidated Edison

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

The idea behind Gabelli Utilities and Consolidated Edison 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.