Correlation Between Gabelli Value and Transamerica Financial

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

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

Diversification Opportunities for Gabelli Value and Transamerica Financial

0.92

Correlation Coefficient

Gabelli Value  Transamerica Financial

Almost no diversification

The 3 months correlation between Gabelli and Transamerica is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Value and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Gabelli Value 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 Value are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Gabelli Value i.e., Gabelli Value and Transamerica Financial go up and down completely randomly.

Pair Corralation between Gabelli Value and Transamerica Financial

Assuming the 90 days horizon The Gabelli Value is expected to generate 1.1 times more return on investment than Transamerica Financial. However, Gabelli Value is 1.1 times more volatile than Transamerica Financial Life. It trades about 0.14 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.07 per unit of risk. If you would invest  1,046  in The Gabelli Value on September 14, 2024 and sell it today you would earn a total of  65.00  from holding The Gabelli Value or generate 6.21% return on investment over 90 days.

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

The Gabelli Value  vs.  Transamerica Financial Life

Gabelli Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Financial

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Financial Life are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica Financial 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 Value and Transamerica Financial

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

The idea behind The Gabelli Value and Transamerica Financial Life 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.