Correlation Between Gabelli Equity and EI Du

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

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

Diversification Opportunities for Gabelli Equity and EI Du

0.5

Correlation Coefficient

Gabelli Equity  EI Du

Very weak diversification

The 3 months correlation between Gabelli and CTA-P-A is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont and Gabelli Equity 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 Equity are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and EI Du go up and down completely randomly.

Pair Corralation between Gabelli Equity and EI Du

Assuming the 90 days trading horizon The Gabelli Equity is expected to generate 0.33 times more return on investment than EI Du. However, The Gabelli Equity is 2.99 times less risky than EI Du. It trades about -0.24 of its potential returns per unit of risk. EI du Pont is currently generating about -0.17 per unit of risk. If you would invest  2,367  in The Gabelli Equity on September 30, 2024 and sell it today you would lose (246.00) from holding The Gabelli Equity or give up 10.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.19%
Values	Daily Returns

The Gabelli Equity  vs.  EI du Pont

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Preferred Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gabelli Equity and EI Du

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

The idea behind The Gabelli Equity and EI du Pont 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.