Correlation Between Investec Emerging and Gabelli Asset

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

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

Diversification Opportunities for Investec Emerging and Gabelli Asset

0.29

Correlation Coefficient

Investec Emerging  Gabelli Asset

Modest diversification

The 3 months correlation between Investec and Gabelli is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and The Gabelli Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Asset and Investec Emerging 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 Investec Emerging Markets are associated (or correlated) with Gabelli Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Asset has no effect on the direction of Investec Emerging i.e., Investec Emerging and Gabelli Asset go up and down completely randomly.

Pair Corralation between Investec Emerging and Gabelli Asset

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 0.32 times more return on investment than Gabelli Asset. However, Investec Emerging Markets is 3.12 times less risky than Gabelli Asset. It trades about 0.01 of its potential returns per unit of risk. The Gabelli Asset is currently generating about -0.3 per unit of risk. If you would invest  1,072  in Investec Emerging Markets on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Investec Emerging Markets or generate 0.19% return on investment over 90 days.

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

Investec Emerging Markets  vs.  The Gabelli Asset

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investec Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Investec Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Asset 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 forward 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 Investec Emerging and Gabelli Asset

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

The idea behind Investec Emerging Markets and The Gabelli Asset 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..