Correlation Between Leigh Baldwin and Gabelli Equity

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

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

Diversification Opportunities for Leigh Baldwin and Gabelli Equity

0.8

Correlation Coefficient

Leigh Baldwin  Gabelli Equity

Very poor diversification

The 3 months correlation between Leigh and Gabelli is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Leigh Baldwin Total and Gabelli Equity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Trust and Leigh Baldwin 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 Leigh Baldwin Total 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 Trust has no effect on the direction of Leigh Baldwin i.e., Leigh Baldwin and Gabelli Equity go up and down completely randomly.

Pair Corralation between Leigh Baldwin and Gabelli Equity

Assuming the 90 days horizon Leigh Baldwin Total is expected to under-perform the Gabelli Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Leigh Baldwin Total is 1.8 times less risky than Gabelli Equity. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Gabelli Equity Trust is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  560.00  in Gabelli Equity Trust on October 11, 2024 and sell it today you would lose (22.00) from holding Gabelli Equity Trust or give up 3.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Leigh Baldwin Total  vs.  Gabelli Equity Trust

Leigh Baldwin Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leigh Baldwin Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Leigh Baldwin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Equity Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Gabelli Equity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Leigh Baldwin and Gabelli Equity

The main advantage of trading using opposite Leigh Baldwin and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leigh Baldwin 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 Leigh Baldwin Total and Gabelli Equity Trust 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.