Correlation Between Gabelli Money and Boston Trust

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

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

Diversification Opportunities for Gabelli Money and Boston Trust

0.49

Correlation Coefficient

Gabelli Money  Boston Trust

Very weak diversification

The 3 months correlation between Gabelli and Boston is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Money and Boston Trust Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Smid and Gabelli Money 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 Money are associated (or correlated) with Boston Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Trust Smid has no effect on the direction of Gabelli Money i.e., Gabelli Money and Boston Trust go up and down completely randomly.

Pair Corralation between Gabelli Money and Boston Trust

Assuming the 90 days horizon Gabelli Money is expected to generate 4.44 times less return on investment than Boston Trust. But when comparing it to its historical volatility, The Gabelli Money is 6.76 times less risky than Boston Trust. It trades about 0.13 of its potential returns per unit of risk. Boston Trust Smid is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,526  in Boston Trust Smid on September 14, 2024 and sell it today you would earn a total of  108.00  from holding Boston Trust Smid or generate 4.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

The Gabelli Money  vs.  Boston Trust Smid

Gabelli Money

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Money are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Trust Smid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Smid are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Boston Trust 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 Money and Boston Trust

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

The idea behind The Gabelli Money and Boston Trust Smid 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.