Correlation Between The Gabelli and Gabelli Growth

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

Diversification Opportunities for The Gabelli and Gabelli Growth

0.02

Correlation Coefficient

The Gabelli  Gabelli Growth

Significant diversification

The 3 months correlation between The and Gabelli is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Focus and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and The Gabelli 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of The Gabelli i.e., The Gabelli and Gabelli Growth go up and down completely randomly.

Pair Corralation between The Gabelli and Gabelli Growth

Assuming the 90 days horizon The Gabelli Focus is expected to generate 0.49 times more return on investment than Gabelli Growth. However, The Gabelli Focus is 2.03 times less risky than Gabelli Growth. It trades about 0.06 of its potential returns per unit of risk. The Gabelli Growth is currently generating about -0.14 per unit of risk. If you would invest  1,720  in The Gabelli Focus on December 24, 2024 and sell it today you would earn a total of  50.00  from holding The Gabelli Focus or generate 2.91% return on investment over 90 days.

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

The Gabelli Focus  vs.  The Gabelli Growth

Gabelli Focus

Risk-Adjusted Performance

Insignificant

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

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with The Gabelli and Gabelli Growth

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

The idea behind The Gabelli Focus and The Gabelli Growth 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.