Correlation Between Gabelli Utilities and Financial Services

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

By analyzing existing cross correlation between Gabelli Utilities and Financial Services Portfolio, you can compare the effects of market volatilities on Gabelli Utilities and Financial Services 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 Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Utilities and Financial Services.

Diversification Opportunities for Gabelli Utilities and Financial Services

0.1

Correlation Coefficient

Gabelli Utilities  Financial Services

Average diversification

The 3 months correlation between Gabelli and Financial is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Utilities and Financial Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services 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 Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Gabelli Utilities i.e., Gabelli Utilities and Financial Services go up and down completely randomly.

Pair Corralation between Gabelli Utilities and Financial Services

Assuming the 90 days horizon Gabelli Utilities is expected to under-perform the Financial Services. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gabelli Utilities is 1.28 times less risky than Financial Services. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Financial Services Portfolio is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,093  in Financial Services Portfolio on October 5, 2024 and sell it today you would earn a total of  398.00  from holding Financial Services Portfolio or generate 36.41% return on investment over 90 days.

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

Gabelli Utilities  vs.  Financial Services Portfolio

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.

Financial Services

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Services Portfolio are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Utilities and Financial Services

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

The idea behind Gabelli Utilities and Financial Services Portfolio 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.