Correlation Between New America and Gabelli Equity

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

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

Diversification Opportunities for New America and Gabelli Equity

-0.1

Correlation Coefficient

New America  Gabelli Equity

Good diversification

The 3 months correlation between New and Gabelli is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding New America High and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and New America 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 New America High 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 has no effect on the direction of New America i.e., New America and Gabelli Equity go up and down completely randomly.

Pair Corralation between New America and Gabelli Equity

Considering the 90-day investment horizon New America High is expected to generate 0.49 times more return on investment than Gabelli Equity. However, New America High is 2.04 times less risky than Gabelli Equity. It trades about -0.01 of its potential returns per unit of risk. The Gabelli Equity is currently generating about -0.11 per unit of risk. If you would invest  822.00  in New America High on December 1, 2024 and sell it today you would lose (2.00) from holding New America High or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

New America High  vs.  The Gabelli Equity

New America High

Risk-Adjusted Performance

Very Weak

Over the last 90 days New America High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, New America is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with New America and Gabelli Equity

The main advantage of trading using opposite New America and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New America 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 New America High and The Gabelli Equity 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.