Correlation Between Largecap Value and Gabelli Convertible

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

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

Diversification Opportunities for Largecap Value and Gabelli Convertible

0.51

Correlation Coefficient

Largecap Value  Gabelli Convertible

Very weak diversification

The 3 months correlation between Largecap and Gabelli is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Largecap Value Fund and Gabelli Convertible And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Convertible And and Largecap Value 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 Largecap Value Fund are associated (or correlated) with Gabelli Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Convertible And has no effect on the direction of Largecap Value i.e., Largecap Value and Gabelli Convertible go up and down completely randomly.

Pair Corralation between Largecap Value and Gabelli Convertible

Assuming the 90 days horizon Largecap Value is expected to generate 18.55 times less return on investment than Gabelli Convertible. But when comparing it to its historical volatility, Largecap Value Fund is 1.44 times less risky than Gabelli Convertible. It trades about 0.0 of its potential returns per unit of risk. Gabelli Convertible And is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  372.00  in Gabelli Convertible And on December 27, 2024 and sell it today you would earn a total of  7.00  from holding Gabelli Convertible And or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Largecap Value Fund  vs.  Gabelli Convertible And

Largecap Value

Risk-Adjusted Performance

Very Weak

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

Gabelli Convertible And

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Convertible And are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable fundamental indicators, Gabelli Convertible is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Largecap Value and Gabelli Convertible

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

The idea behind Largecap Value Fund and Gabelli Convertible And 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.