Correlation Between Tri Continental and Gabelli Equity

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

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

Diversification Opportunities for Tri Continental and Gabelli Equity

0.91

Correlation Coefficient

Tri Continental  Gabelli Equity

Almost no diversification

The 3 months correlation between Tri and Gabelli is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental PFD and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Tri Continental 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 Tri Continental PFD are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Tri Continental i.e., Tri Continental and Gabelli Equity go up and down completely randomly.

Pair Corralation between Tri Continental and Gabelli Equity

Given the investment horizon of 90 days Tri Continental PFD is expected to under-perform the Gabelli Equity. In addition to that, Tri Continental is 1.45 times more volatile than The Gabelli Equity. It trades about -0.09 of its total potential returns per unit of risk. The Gabelli Equity is currently generating about -0.08 per unit of volatility. If you would invest  2,351  in The Gabelli Equity on September 12, 2024 and sell it today you would lose (56.00) from holding The Gabelli Equity or give up 2.38% of portfolio value over 90 days.

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

Tri Continental PFD  vs.  The Gabelli Equity

Tri Continental PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental PFD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tri Continental is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tri Continental and Gabelli Equity

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

The idea behind Tri Continental PFD and The Gabelli Equity 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.