Correlation Between Gabelli Media and Transamerica Large

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

By analyzing existing cross correlation between Gabelli Media Mogul and Transamerica Large Cap, you can compare the effects of market volatilities on Gabelli Media and Transamerica Large 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 Gabelli Media with a short position of Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Media and Transamerica Large.

Diversification Opportunities for Gabelli Media and Transamerica Large

0.9

Correlation Coefficient

Gabelli Media  Transamerica Large

Almost no diversification

The 3 months correlation between Gabelli and Transamerica is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Media Mogul and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap and Gabelli Media 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 Gabelli Media Mogul are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Gabelli Media i.e., Gabelli Media and Transamerica Large go up and down completely randomly.

Pair Corralation between Gabelli Media and Transamerica Large

Assuming the 90 days horizon Gabelli Media Mogul is expected to generate 1.6 times more return on investment than Transamerica Large. However, Gabelli Media is 1.6 times more volatile than Transamerica Large Cap. It trades about 0.16 of its potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.15 per unit of risk. If you would invest  865.00  in Gabelli Media Mogul on September 12, 2024 and sell it today you would earn a total of  90.00  from holding Gabelli Media Mogul or generate 10.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Gabelli Media Mogul  vs.  Transamerica Large Cap

Gabelli Media Mogul

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Media Mogul are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Gabelli Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transamerica Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Media and Transamerica Large

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

The idea behind Gabelli Media Mogul and Transamerica Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.