Correlation Between Bancroft Fund and Gabelli Dividend

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

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

Diversification Opportunities for Bancroft Fund and Gabelli Dividend

0.89

Correlation Coefficient

Bancroft Fund  Gabelli Dividend

Very poor diversification

The 3 months correlation between Bancroft and Gabelli is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bancroft Fund and The Gabelli Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Dividend and Bancroft Fund 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 Bancroft Fund are associated (or correlated) with Gabelli Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Dividend has no effect on the direction of Bancroft Fund i.e., Bancroft Fund and Gabelli Dividend go up and down completely randomly.

Pair Corralation between Bancroft Fund and Gabelli Dividend

Assuming the 90 days trading horizon Bancroft Fund is expected to under-perform the Gabelli Dividend. In addition to that, Bancroft Fund is 2.12 times more volatile than The Gabelli Dividend. It trades about -0.09 of its total potential returns per unit of risk. The Gabelli Dividend is currently generating about -0.14 per unit of volatility. If you would invest  2,472  in The Gabelli Dividend on September 4, 2024 and sell it today you would lose (13.00) from holding The Gabelli Dividend or give up 0.53% of portfolio value over 90 days.

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

Bancroft Fund  vs.  The Gabelli Dividend

Bancroft Fund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bancroft Fund are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bancroft Fund is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Dividend are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Gabelli Dividend is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bancroft Fund and Gabelli Dividend

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

The idea behind Bancroft Fund and The Gabelli Dividend 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.