Correlation Between Investor and Gabelli Utility

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

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

Diversification Opportunities for Investor and Gabelli Utility

0.39

Correlation Coefficient

Investor  Gabelli Utility

Weak diversification

The 3 months correlation between Investor and Gabelli is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and The Gabelli Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility and Investor 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 Investor AB ser are associated (or correlated) with Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility has no effect on the direction of Investor i.e., Investor and Gabelli Utility go up and down completely randomly.

Pair Corralation between Investor and Gabelli Utility

Assuming the 90 days horizon Investor AB ser is expected to generate 2.04 times more return on investment than Gabelli Utility. However, Investor is 2.04 times more volatile than The Gabelli Utility. It trades about 0.07 of its potential returns per unit of risk. The Gabelli Utility is currently generating about 0.04 per unit of risk. If you would invest  1,866  in Investor AB ser on October 4, 2024 and sell it today you would earn a total of  739.00  from holding Investor AB ser or generate 39.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.33%
Values	Daily Returns

Investor AB ser  vs.  The Gabelli Utility

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gabelli Utility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Utility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Utility is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Investor and Gabelli Utility

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

The idea behind Investor AB ser and The Gabelli Utility 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.