Correlation Between Gabelli Focus and Gabelli Equity

Can any of the company-specific risk be diversified away by investing in both Gabelli Focus and Gabelli Equity 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 Equity 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 Gabelli Equity Income, you can compare the effects of market volatilities on Gabelli Focus and Gabelli Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Focus and Gabelli Equity.

Diversification Opportunities for Gabelli Focus and Gabelli Equity

0.94

Correlation Coefficient

Gabelli Focus  Gabelli Equity

Almost no diversification

The 3 months correlation between Gabelli and Gabelli is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Focus and Gabelli Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity Income has no effect on the direction of Gabelli Focus i.e., Gabelli Focus and Gabelli Equity go up and down completely randomly.

Pair Corralation between Gabelli Focus and Gabelli Equity

Assuming the 90 days horizon The Gabelli Focus is expected to generate 1.09 times more return on investment than Gabelli Equity. However, Gabelli Focus is 1.09 times more volatile than Gabelli Equity Income. It trades about 0.23 of its potential returns per unit of risk. Gabelli Equity Income is currently generating about 0.04 per unit of risk. If you would invest  1,741  in The Gabelli Focus on September 12, 2024 and sell it today you would earn a total of  51.00  from holding The Gabelli Focus or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

The Gabelli Focus  vs.  Gabelli Equity Income

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 weak basic indicators, Gabelli Focus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gabelli Equity Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gabelli Equity 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 Focus and Gabelli Equity

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

The idea behind The Gabelli Focus and Gabelli Equity Income 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.