Correlation Between Gabelli Healthcare and State Street

Can any of the company-specific risk be diversified away by investing in both Gabelli Healthcare and State Street 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 State Street 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 State Street Core, you can compare the effects of market volatilities on Gabelli Healthcare and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Healthcare and State Street.

Diversification Opportunities for Gabelli Healthcare and State Street

0.32

Correlation Coefficient

Gabelli Healthcare  State Street

Weak diversification

The 3 months correlation between Gabelli and State is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and State Street Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Core 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Core has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and State Street go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and State Street

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the State Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Healthcare is 1.31 times less risky than State Street. The mutual fund trades about -0.02 of its potential returns per unit of risk. The State Street Core is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,577  in State Street Core on October 10, 2024 and sell it today you would earn a total of  1,659  from holding State Street Core or generate 29.75% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  State Street Core

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.

State Street Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street Core 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Gabelli Healthcare and State Street

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

The idea behind The Gabelli Healthcare and State Street Core 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.