Correlation Between Gabelli Utilities and First Eagle

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

By analyzing existing cross correlation between Gabelli Utilities and First Eagle Gold, you can compare the effects of market volatilities on Gabelli Utilities and First Eagle 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 Utilities with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Utilities and First Eagle.

Diversification Opportunities for Gabelli Utilities and First Eagle

0.23

Correlation Coefficient

Gabelli Utilities  First Eagle

Modest diversification

The 3 months correlation between Gabelli and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Utilities and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and Gabelli Utilities 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 Utilities are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Gold has no effect on the direction of Gabelli Utilities i.e., Gabelli Utilities and First Eagle go up and down completely randomly.

Pair Corralation between Gabelli Utilities and First Eagle

Assuming the 90 days horizon Gabelli Utilities is expected to generate 0.45 times more return on investment than First Eagle. However, Gabelli Utilities is 2.21 times less risky than First Eagle. It trades about 0.0 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.06 per unit of risk. If you would invest  596.00  in Gabelli Utilities on September 12, 2024 and sell it today you would lose (1.00) from holding Gabelli Utilities or give up 0.17% of portfolio value over 90 days.

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

Gabelli Utilities  vs.  First Eagle Gold

Gabelli Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabelli Utilities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gabelli Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, First Eagle 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 Utilities and First Eagle

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

The idea behind Gabelli Utilities and First Eagle Gold 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.