Correlation Between Gabelli Value and Barings Active

Can any of the company-specific risk be diversified away by investing in both Gabelli Value and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Gabelli Value and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Value and Barings Active.

Diversification Opportunities for Gabelli Value and Barings Active

0.54

Correlation Coefficient

Gabelli Value  Barings Active

Very weak diversification

The 3 months correlation between Gabelli and Barings is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Value and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Gabelli Value i.e., Gabelli Value and Barings Active go up and down completely randomly.

Pair Corralation between Gabelli Value and Barings Active

Assuming the 90 days horizon The Gabelli Value is expected to generate 6.28 times more return on investment than Barings Active. However, Gabelli Value is 6.28 times more volatile than Barings Active Short. It trades about 0.16 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.13 per unit of risk. If you would invest  689.00  in The Gabelli Value on September 2, 2024 and sell it today you would earn a total of  51.00  from holding The Gabelli Value or generate 7.4% return on investment over 90 days.

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

The Gabelli Value  vs.  Barings Active Short

Gabelli Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gabelli Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barings Active Short

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Active Short are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Value and Barings Active

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

The idea behind The Gabelli Value and Barings Active Short 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.