Correlation Between Gabelli Healthcare and Transamerica Large

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

Diversification Opportunities for Gabelli Healthcare and Transamerica Large

-0.82

Correlation Coefficient

Gabelli Healthcare  Transamerica Large

Pay attention - limited upside

The 3 months correlation between Gabelli and Transamerica is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Transamerica Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Growth 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Growth has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Transamerica Large go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Transamerica Large

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the Transamerica Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Healthcare is 1.56 times less risky than Transamerica Large. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Transamerica Large Growth is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,323  in Transamerica Large Growth on September 16, 2024 and sell it today you would earn a total of  359.00  from holding Transamerica Large Growth or generate 27.14% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  Transamerica Large Growth

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 inconsistent 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.

Transamerica Large Growth

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Growth are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transamerica Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Healthcare and Transamerica Large

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

The idea behind The Gabelli Healthcare and Transamerica Large Growth 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.