Correlation Between Gabelli Equity and Mesirow Financial

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

By analyzing existing cross correlation between Gabelli Equity Trust and Mesirow Financial High, you can compare the effects of market volatilities on Gabelli Equity and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Mesirow Financial.

Diversification Opportunities for Gabelli Equity and Mesirow Financial

0.77

Correlation Coefficient

Gabelli Equity  Mesirow Financial

Poor diversification

The 3 months correlation between Gabelli and Mesirow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Mesirow Financial High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial High 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 Gabelli Equity Trust are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial High has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Mesirow Financial go up and down completely randomly.

Pair Corralation between Gabelli Equity and Mesirow Financial

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 4.87 times more return on investment than Mesirow Financial. However, Gabelli Equity is 4.87 times more volatile than Mesirow Financial High. It trades about 0.16 of its potential returns per unit of risk. Mesirow Financial High is currently generating about 0.16 per unit of risk. If you would invest  535.00  in Gabelli Equity Trust on August 31, 2024 and sell it today you would earn a total of  42.00  from holding Gabelli Equity Trust or generate 7.85% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Mesirow Financial High

Gabelli Equity Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Mesirow Financial High

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial High are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mesirow Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Equity and Mesirow Financial

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

The idea behind Gabelli Equity Trust and Mesirow Financial High 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.