Correlation Between Optimum Large and Gabelli Money

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

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

Diversification Opportunities for Optimum Large and Gabelli Money

0.5

Correlation Coefficient

Optimum Large  Gabelli Money

Very weak diversification

The 3 months correlation between Optimum and Gabelli is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Large Cap and The Gabelli Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Money and Optimum Large 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 Optimum Large Cap are associated (or correlated) with Gabelli Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Money has no effect on the direction of Optimum Large i.e., Optimum Large and Gabelli Money go up and down completely randomly.

Pair Corralation between Optimum Large and Gabelli Money

Assuming the 90 days horizon Optimum Large is expected to generate 9.1 times less return on investment than Gabelli Money. But when comparing it to its historical volatility, Optimum Large Cap is 13.08 times less risky than Gabelli Money. It trades about 0.05 of its potential returns per unit of risk. The Gabelli Money is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  89.00  in The Gabelli Money on September 14, 2024 and sell it today you would earn a total of  11.00  from holding The Gabelli Money or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.6%
Values	Daily Returns

Optimum Large Cap  vs.  The Gabelli Money

Optimum Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gabelli Money

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Money are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Optimum Large and Gabelli Money

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

The idea behind Optimum Large Cap and The Gabelli Money 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.