Correlation Between Value Fund and Gabelli Healthcare

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

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

Diversification Opportunities for Value Fund and Gabelli Healthcare

0.39

Correlation Coefficient

Value Fund  Gabelli Healthcare

Weak diversification

The 3 months correlation between Value and Gabelli is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare and Value 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 Value Fund Value are associated (or correlated) with Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Value Fund i.e., Value Fund and Gabelli Healthcare go up and down completely randomly.

Pair Corralation between Value Fund and Gabelli Healthcare

Assuming the 90 days horizon Value Fund Value is expected to under-perform the Gabelli Healthcare. In addition to that, Value Fund is 3.35 times more volatile than The Gabelli Healthcare. It trades about -0.34 of its total potential returns per unit of risk. The Gabelli Healthcare is currently generating about -0.46 per unit of volatility. If you would invest  1,189  in The Gabelli Healthcare on September 24, 2024 and sell it today you would lose (86.00) from holding The Gabelli Healthcare or give up 7.23% of portfolio value over 90 days.

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

Value Fund Value  vs.  The Gabelli Healthcare

Value Fund Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Fund Value 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

The Gabelli Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Healthcare 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Value Fund and Gabelli Healthcare

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

The idea behind Value Fund Value and The Gabelli Healthcare 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.