Correlation Between Balanced Fund and Gabelli Equity

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

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

Diversification Opportunities for Balanced Fund and Gabelli Equity

0.93

Correlation Coefficient

Balanced Fund  Gabelli Equity

Almost no diversification

The 3 months correlation between Balanced and Gabelli is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Balanced 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 Balanced Fund Retail are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Balanced Fund i.e., Balanced Fund and Gabelli Equity go up and down completely randomly.

Pair Corralation between Balanced Fund and Gabelli Equity

Assuming the 90 days horizon Balanced Fund is expected to generate 1.45 times less return on investment than Gabelli Equity. But when comparing it to its historical volatility, Balanced Fund Retail is 1.41 times less risky than Gabelli Equity. It trades about 0.15 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  602.00  in The Gabelli Equity on September 12, 2024 and sell it today you would earn a total of  40.00  from holding The Gabelli Equity or generate 6.64% return on investment over 90 days.

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

Balanced Fund Retail  vs.  The Gabelli Equity

Balanced Fund Retail

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Retail are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Balanced Fund and Gabelli Equity

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

The idea behind Balanced Fund Retail and The Gabelli Equity 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.