Correlation Between Gabelli Global and Strategic Allocation

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

By analyzing existing cross correlation between Gabelli Global Financial and Strategic Allocation Aggressive, you can compare the effects of market volatilities on Gabelli Global and Strategic Allocation 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 Global with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Strategic Allocation.

Diversification Opportunities for Gabelli Global and Strategic Allocation

0.85

Correlation Coefficient

Gabelli Global  Strategic Allocation

Very poor diversification

The 3 months correlation between Gabelli and Strategic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and Strategic Allocation Aggressiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Gabelli Global 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 Global Financial are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Gabelli Global i.e., Gabelli Global and Strategic Allocation go up and down completely randomly.

Pair Corralation between Gabelli Global and Strategic Allocation

Assuming the 90 days horizon Gabelli Global Financial is expected to generate 1.75 times more return on investment than Strategic Allocation. However, Gabelli Global is 1.75 times more volatile than Strategic Allocation Aggressive. It trades about 0.18 of its potential returns per unit of risk. Strategic Allocation Aggressive is currently generating about 0.16 per unit of risk. If you would invest  1,465  in Gabelli Global Financial on September 12, 2024 and sell it today you would earn a total of  151.00  from holding Gabelli Global Financial or generate 10.31% return on investment over 90 days.

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

Gabelli Global Financial  vs.  Strategic Allocation Aggressiv

Gabelli Global Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Strategic Allocation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Aggressive are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Allocation 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 Global and Strategic Allocation

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

The idea behind Gabelli Global Financial and Strategic Allocation Aggressive 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.