Correlation Between Western Asset and Gabelli Utility

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

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

Diversification Opportunities for Western Asset and Gabelli Utility

0.23

Correlation Coefficient

Western Asset  Gabelli Utility

Modest diversification

The 3 months correlation between Western and Gabelli is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed and Western Asset 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 Western Asset Managed 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 Closed has no effect on the direction of Western Asset i.e., Western Asset and Gabelli Utility go up and down completely randomly.

Pair Corralation between Western Asset and Gabelli Utility

Considering the 90-day investment horizon Western Asset is expected to generate 4.8 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Western Asset Managed is 2.72 times less risky than Gabelli Utility. It trades about 0.15 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  501.00  in Gabelli Utility Closed on September 12, 2024 and sell it today you would earn a total of  40.00  from holding Gabelli Utility Closed or generate 7.98% return on investment over 90 days.

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

Western Asset Managed  vs.  Gabelli Utility Closed

Western Asset Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gabelli Utility Closed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Gabelli Utility is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Asset and Gabelli Utility

The main advantage of trading using opposite Western Asset and Gabelli Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Western Asset Managed and Gabelli Utility Closed 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.