Correlation Between The Gabelli and Brown Advisory

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

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

Diversification Opportunities for The Gabelli and Brown Advisory

0.51

Correlation Coefficient

The Gabelli  Brown Advisory

Very weak diversification

The 3 months correlation between The and Brown is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and Brown Advisory Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Flexible and The Gabelli 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 Small are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Flexible has no effect on the direction of The Gabelli i.e., The Gabelli and Brown Advisory go up and down completely randomly.

Pair Corralation between The Gabelli and Brown Advisory

Assuming the 90 days horizon The Gabelli is expected to generate 1.66 times less return on investment than Brown Advisory. In addition to that, The Gabelli is 1.81 times more volatile than Brown Advisory Flexible. It trades about 0.07 of its total potential returns per unit of risk. Brown Advisory Flexible is currently generating about 0.2 per unit of volatility. If you would invest  4,074  in Brown Advisory Flexible on September 3, 2024 and sell it today you would earn a total of  390.00  from holding Brown Advisory Flexible or generate 9.57% return on investment over 90 days.

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

The Gabelli Small  vs.  Brown Advisory Flexible

Gabelli Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brown Advisory Flexible

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory Flexible are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Brown Advisory may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with The Gabelli and Brown Advisory

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

The idea behind The Gabelli Small and Brown Advisory Flexible 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.