Correlation Between Dow Jones and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Dow Jones and The Gabelli 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 Dow Jones and The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and The Gabelli Focus, you can compare the effects of market volatilities on Dow Jones and The Gabelli 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 Dow Jones with a short position of The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and The Gabelli.
Diversification Opportunities for Dow Jones and The Gabelli
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and The is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and The Gabelli Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Focus and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Focus has no effect on the direction of Dow Jones i.e., Dow Jones and The Gabelli go up and down completely randomly.
Pair Corralation between Dow Jones and The Gabelli
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.05 times more return on investment than The Gabelli. However, Dow Jones is 1.05 times more volatile than The Gabelli Focus. It trades about -0.03 of its potential returns per unit of risk. The Gabelli Focus is currently generating about -0.18 per unit of risk. If you would invest 4,143,348 in Dow Jones Industrial on January 10, 2025 and sell it today you would lose (82,503) from holding Dow Jones Industrial or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. The Gabelli Focus
Performance |
| Timeline |
Dow Jones and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
The Gabelli Focus
Pair trading matchups for The Gabelli
Pair Trading with Dow Jones and The Gabelli
The main advantage of trading using opposite Dow Jones and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, The Gabelli 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 The Gabelli will offset losses from the drop in The Gabelli's long position.| Dow Jones vs. Life Time Group | Dow Jones vs. Emerson Radio | Dow Jones vs. Eastern Co | Dow Jones vs. Mid Atlantic Home Health |
| The Gabelli vs. The Gabelli Dividend | The Gabelli vs. Gamco Global Opportunity | The Gabelli vs. Gamco International Growth | The Gabelli vs. The Gabelli Global |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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