Correlation Between Gabelli Equity and Western Asset
Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Western Asset 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 Equity and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gabelli Equity and Western Asset High, you can compare the effects of market volatilities on Gabelli Equity and Western Asset 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 Equity with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Western Asset.
Diversification Opportunities for Gabelli Equity and Western Asset
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gabelli and Western is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Gabelli Equity 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 Equity are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Western Asset go up and down completely randomly.
Pair Corralation between Gabelli Equity and Western Asset
Assuming the 90 days trading horizon The Gabelli Equity is expected to under-perform the Western Asset. But the preferred stock apears to be less risky and, when comparing its historical volatility, The Gabelli Equity is 1.12 times less risky than Western Asset. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Western Asset High is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 394.00 in Western Asset High on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Western Asset High or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Equity vs. Western Asset High
Performance |
| Timeline |
| Gabelli Equity |
| Western Asset High |
Gabelli Equity and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Equity and Western Asset
The main advantage of trading using opposite Gabelli Equity and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Gabelli Equity vs. The Gabelli Multimedia | Gabelli Equity vs. The Gabelli Equity | Gabelli Equity vs. Virtus AllianzGI Convertible | Gabelli Equity vs. John Hancock Income |
| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Western Asset High |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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