Correlation Between Gabelli Val and Gabelli Global

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

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

Diversification Opportunities for Gabelli Val and Gabelli Global

0.86

Correlation Coefficient

Gabelli Val  Gabelli Global

Very poor diversification

The 3 months correlation between Gabelli and Gabelli is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Val and Gabelli Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Financial and Gabelli Val 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 Val are associated (or correlated) with Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Financial has no effect on the direction of Gabelli Val i.e., Gabelli Val and Gabelli Global go up and down completely randomly.

Pair Corralation between Gabelli Val and Gabelli Global

Assuming the 90 days horizon Gabelli Val is expected to generate 1.11 times less return on investment than Gabelli Global. But when comparing it to its historical volatility, The Gabelli Val is 1.29 times less risky than Gabelli Global. It trades about 0.16 of its potential returns per unit of risk. Gabelli Global Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,527  in Gabelli Global Financial on September 2, 2024 and sell it today you would earn a total of  130.00  from holding Gabelli Global Financial or generate 8.51% return on investment over 90 days.

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

The Gabelli Val  vs.  Gabelli Global Financial

Gabelli Val

Risk-Adjusted Performance

12 of 100

Good

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

Gabelli Global Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 10 (%) 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.

Pair Trading with Gabelli Val and Gabelli Global

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

The idea behind The Gabelli Val and Gabelli Global Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.