Correlation Between XAI Octagon and Gabelli Equity

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

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

Diversification Opportunities for XAI Octagon and Gabelli Equity

-0.72

Correlation Coefficient

XAI Octagon  Gabelli Equity

Pay attention - limited upside

The 3 months correlation between XAI and Gabelli is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding XAI Octagon Floating and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and XAI Octagon 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 XAI Octagon Floating are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of XAI Octagon i.e., XAI Octagon and Gabelli Equity go up and down completely randomly.

Pair Corralation between XAI Octagon and Gabelli Equity

Assuming the 90 days trading horizon XAI Octagon Floating is expected to generate 0.77 times more return on investment than Gabelli Equity. However, XAI Octagon Floating is 1.3 times less risky than Gabelli Equity. It trades about 0.04 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.02 per unit of risk. If you would invest  2,216  in XAI Octagon Floating on October 10, 2024 and sell it today you would earn a total of  312.00  from holding XAI Octagon Floating or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

XAI Octagon Floating  vs.  The Gabelli Equity

XAI Octagon Floating

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, XAI Octagon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with XAI Octagon and Gabelli Equity

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

The idea behind XAI Octagon Floating and The Gabelli Equity 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.