Correlation Between Saat Moderate and The Gabelli

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

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

Diversification Opportunities for Saat Moderate and The Gabelli

0.41

Correlation Coefficient

Saat Moderate  The Gabelli

Very weak diversification

The 3 months correlation between Saat and The is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Saat Moderate Strategy and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Saat Moderate 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 Saat Moderate Strategy 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 Focus has no effect on the direction of Saat Moderate i.e., Saat Moderate and The Gabelli go up and down completely randomly.

Pair Corralation between Saat Moderate and The Gabelli

Assuming the 90 days horizon Saat Moderate is expected to generate 5.66 times less return on investment than The Gabelli. But when comparing it to its historical volatility, Saat Moderate Strategy is 1.38 times less risky than The Gabelli. It trades about 0.01 of its potential returns per unit of risk. The Gabelli Focus is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,564  in The Gabelli Focus on October 9, 2024 and sell it today you would earn a total of  333.00  from holding The Gabelli Focus or generate 21.29% return on investment over 90 days.

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

Saat Moderate Strategy  vs.  The Gabelli Focus

Saat Moderate Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saat Moderate Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gabelli Focus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Focus are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saat Moderate and The Gabelli

The main advantage of trading using opposite Saat Moderate and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Moderate 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 Saat Moderate Strategy 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 Transaction History module to view history of all your transactions and understand their impact on performance.