Correlation Between Gabelli Focus and Gabelli Val

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

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

Diversification Opportunities for Gabelli Focus and Gabelli Val

0.9

Correlation Coefficient

Gabelli Focus  Gabelli Val

Almost no diversification

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

Pair Corralation between Gabelli Focus and Gabelli Val

Assuming the 90 days horizon Gabelli Focus is expected to generate 1.08 times less return on investment than Gabelli Val. But when comparing it to its historical volatility, The Gabelli Focus is 1.08 times less risky than Gabelli Val. It trades about 0.17 of its potential returns per unit of risk. The Gabelli Val is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,031  in The Gabelli Val on September 12, 2024 and sell it today you would earn a total of  80.00  from holding The Gabelli Val or generate 7.76% return on investment over 90 days.

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

The Gabelli Focus  vs.  The Gabelli Val

Gabelli Focus

Risk-Adjusted Performance

13 of 100

Good

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

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.

Pair Trading with Gabelli Focus and Gabelli Val

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

The idea behind The Gabelli Focus and The Gabelli Val 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.