Correlation Between Oklahoma Municipal and Gabelli Focus

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

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

Diversification Opportunities for Oklahoma Municipal and Gabelli Focus

0.33

Correlation Coefficient

Oklahoma Municipal  Gabelli Focus

Weak diversification

The 3 months correlation between Oklahoma and Gabelli is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Oklahoma Municipal 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 Oklahoma Municipal Fund are associated (or correlated) with Gabelli Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Focus has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Gabelli Focus go up and down completely randomly.

Pair Corralation between Oklahoma Municipal and Gabelli Focus

Assuming the 90 days horizon Oklahoma Municipal is expected to generate 26.09 times less return on investment than Gabelli Focus. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 2.27 times less risky than Gabelli Focus. It trades about 0.01 of its potential returns per unit of risk. The Gabelli Focus is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,354  in The Gabelli Focus on September 13, 2024 and sell it today you would earn a total of  76.00  from holding The Gabelli Focus or generate 5.61% return on investment over 90 days.

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

Oklahoma Municipal Fund  vs.  The Gabelli Focus

Oklahoma Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gabelli Focus

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gabelli Focus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oklahoma Municipal and Gabelli Focus

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

The idea behind Oklahoma Municipal Fund and The Gabelli Focus 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.