Correlation Between Americafirst Large and Gabelli Focus

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

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

Diversification Opportunities for Americafirst Large and Gabelli Focus

0.78

Correlation Coefficient

Americafirst Large  Gabelli Focus

Poor diversification

The 3 months correlation between Americafirst and Gabelli is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Americafirst Large 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 Americafirst Large Cap 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 Americafirst Large i.e., Americafirst Large and Gabelli Focus go up and down completely randomly.

Pair Corralation between Americafirst Large and Gabelli Focus

Assuming the 90 days horizon Americafirst Large Cap is expected to generate 1.35 times more return on investment than Gabelli Focus. However, Americafirst Large is 1.35 times more volatile than The Gabelli Focus. It trades about 0.17 of its potential returns per unit of risk. The Gabelli Focus is currently generating about 0.15 per unit of risk. If you would invest  1,304  in Americafirst Large Cap on September 13, 2024 and sell it today you would earn a total of  124.00  from holding Americafirst Large Cap or generate 9.51% return on investment over 90 days.

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

Americafirst Large Cap  vs.  The Gabelli Focus

Americafirst Large Cap

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gabelli Focus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Americafirst Large and Gabelli Focus

The main advantage of trading using opposite Americafirst Large and Gabelli Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large 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 Americafirst Large Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.