Correlation Between Gabelli Val and Bright Rock

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

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

Diversification Opportunities for Gabelli Val and Bright Rock

0.9

Correlation Coefficient

Gabelli Val  Bright Rock

Almost no diversification

The 3 months correlation between Gabelli and Bright is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Val and Bright Rock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Mid and Gabelli Val 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 The Gabelli Val are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Mid has no effect on the direction of Gabelli Val i.e., Gabelli Val and Bright Rock go up and down completely randomly.

Pair Corralation between Gabelli Val and Bright Rock

Assuming the 90 days horizon Gabelli Val is expected to generate 1.05 times less return on investment than Bright Rock. In addition to that, Gabelli Val is 1.05 times more volatile than Bright Rock Mid. It trades about 0.17 of its total potential returns per unit of risk. Bright Rock Mid is currently generating about 0.19 per unit of volatility. If you would invest  2,521  in Bright Rock Mid on September 12, 2024 and sell it today you would earn a total of  209.00  from holding Bright Rock Mid or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

The Gabelli Val  vs.  Bright Rock Mid

Gabelli Val

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Val are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Gabelli Val may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bright Rock Mid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Rock Mid are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Bright Rock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Val and Bright Rock

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

The idea behind The Gabelli Val and Bright Rock Mid 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.