Correlation Between Smallcap Fund and The Gabelli

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

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

Diversification Opportunities for Smallcap Fund and The Gabelli

0.5

Correlation Coefficient

Smallcap Fund  The Gabelli

Very weak diversification

The 3 months correlation between Smallcap and THE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and The Gabelli go up and down completely randomly.

Pair Corralation between Smallcap Fund and The Gabelli

Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 0.69 times more return on investment than The Gabelli. However, Smallcap Fund Fka is 1.45 times less risky than The Gabelli. It trades about -0.07 of its potential returns per unit of risk. The Gabelli Growth is currently generating about -0.14 per unit of risk. If you would invest  2,546  in Smallcap Fund Fka on December 20, 2024 and sell it today you would lose (136.00) from holding Smallcap Fund Fka or give up 5.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Smallcap Fund Fka  vs.  The Gabelli Growth

Smallcap Fund Fka

Risk-Adjusted Performance

Very Weak

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

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Smallcap Fund and The Gabelli

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

The idea behind Smallcap Fund Fka and The Gabelli Growth 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.