Correlation Between Gabelli Healthcare and Vanguard European

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

Diversification Opportunities for Gabelli Healthcare and Vanguard European

0.53

Correlation Coefficient

Gabelli Healthcare  Vanguard European

Very weak diversification

The 3 months correlation between Gabelli and Vanguard is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Vanguard European Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard European Stock 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 Vanguard European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard European Stock has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Vanguard European go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Vanguard European

Assuming the 90 days horizon Gabelli Healthcare is expected to generate 3.2 times less return on investment than Vanguard European. In addition to that, Gabelli Healthcare is 1.0 times more volatile than Vanguard European Stock. It trades about 0.06 of its total potential returns per unit of risk. Vanguard European Stock is currently generating about 0.19 per unit of volatility. If you would invest  3,391  in Vanguard European Stock on December 30, 2024 and sell it today you would earn a total of  392.00  from holding Vanguard European Stock or generate 11.56% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  Vanguard European Stock

The Gabelli Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Healthcare are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard European Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard European Stock are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard European may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gabelli Healthcare and Vanguard European

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

The idea behind The Gabelli Healthcare and Vanguard European Stock 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.