Correlation Between Gabelli Convertible and Davis International

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

By analyzing existing cross correlation between Gabelli Convertible And and Davis International Fund, you can compare the effects of market volatilities on Gabelli Convertible and Davis International 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 Convertible with a short position of Davis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Convertible and Davis International.

Diversification Opportunities for Gabelli Convertible and Davis International

-0.62

Correlation Coefficient

Gabelli Convertible  Davis International

Excellent diversification

The 3 months correlation between Gabelli and DAVIS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Convertible And and Davis International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis International and Gabelli Convertible 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 Convertible And are associated (or correlated) with Davis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis International has no effect on the direction of Gabelli Convertible i.e., Gabelli Convertible and Davis International go up and down completely randomly.

Pair Corralation between Gabelli Convertible and Davis International

Considering the 90-day investment horizon Gabelli Convertible is expected to generate 1.17 times less return on investment than Davis International. But when comparing it to its historical volatility, Gabelli Convertible And is 1.23 times less risky than Davis International. It trades about 0.1 of its potential returns per unit of risk. Davis International Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,035  in Davis International Fund on September 4, 2024 and sell it today you would earn a total of  343.00  from holding Davis International Fund or generate 33.14% return on investment over 90 days.

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

Gabelli Convertible And  vs.  Davis International Fund

Gabelli Convertible And

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Convertible And are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable fundamental indicators, Gabelli Convertible is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Davis International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Davis International Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Davis International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Convertible and Davis International

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

The idea behind Gabelli Convertible And and Davis International Fund 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.