Correlation Between Gabelli Utilities and The Gabelli

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

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

Diversification Opportunities for Gabelli Utilities and The Gabelli

0.78

Correlation Coefficient

Gabelli Utilities  The Gabelli

Poor diversification

The 3 months correlation between Gabelli and THE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Utilities and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Focus has no effect on the direction of Gabelli Utilities i.e., Gabelli Utilities and The Gabelli go up and down completely randomly.

Pair Corralation between Gabelli Utilities and The Gabelli

Assuming the 90 days horizon Gabelli Utilities is expected to generate 3.37 times less return on investment than The Gabelli. In addition to that, Gabelli Utilities is 1.13 times more volatile than The Gabelli Focus. It trades about 0.05 of its total potential returns per unit of risk. The Gabelli Focus is currently generating about 0.2 per unit of volatility. If you would invest  1,655  in The Gabelli Focus on September 5, 2024 and sell it today you would earn a total of  144.00  from holding The Gabelli Focus or generate 8.7% return on investment over 90 days.

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

Gabelli Utilities  vs.  The Gabelli Focus

Gabelli Utilities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utilities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Utilities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Focus

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, The Gabelli may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Utilities and The Gabelli

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

The idea behind Gabelli Utilities and The Gabelli Focus 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.