Correlation Between Nasdaq and Gabelli Small

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

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

Diversification Opportunities for Nasdaq and Gabelli Small

0.04

Correlation Coefficient

Nasdaq  Gabelli Small

Significant diversification

The 3 months correlation between Nasdaq and Gabelli is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and The Gabelli Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Small and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Gabelli Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Small has no effect on the direction of Nasdaq i.e., Nasdaq and Gabelli Small go up and down completely randomly.

Pair Corralation between Nasdaq and Gabelli Small

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.02 times more return on investment than Gabelli Small. However, Nasdaq is 1.02 times more volatile than The Gabelli Small. It trades about -0.17 of its potential returns per unit of risk. The Gabelli Small is currently generating about -0.34 per unit of risk. If you would invest  8,114  in Nasdaq Inc on October 7, 2024 and sell it today you would lose (292.00) from holding Nasdaq Inc or give up 3.6% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  The Gabelli Small

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gabelli Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq and Gabelli Small

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

The idea behind Nasdaq Inc and The Gabelli Small 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.