Correlation Between Gabelli Healthcare and Mid Cap

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

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

Diversification Opportunities for Gabelli Healthcare and Mid Cap

-0.72

Correlation Coefficient

Gabelli Healthcare  Mid Cap

Pay attention - limited upside

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

Pair Corralation between Gabelli Healthcare and Mid Cap

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the Mid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Healthcare is 1.27 times less risky than Mid Cap. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Mid Cap Value Profund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,568  in Mid Cap Value Profund on September 13, 2024 and sell it today you would earn a total of  792.00  from holding Mid Cap Value Profund or generate 9.24% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  Mid Cap Value Profund

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 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.

Mid Cap Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value Profund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Healthcare and Mid Cap

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

The idea behind The Gabelli Healthcare and Mid Cap Value Profund 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.