Correlation Between Gabelli Equity and Legal General
Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Legal General 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 Legal General 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 Legal General Group, you can compare the effects of market volatilities on Gabelli Equity and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Legal General.
Diversification Opportunities for Gabelli Equity and Legal General
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gabelli and Legal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Legal General go up and down completely randomly.
Pair Corralation between Gabelli Equity and Legal General
Assuming the 90 days trading horizon The Gabelli Equity is expected to under-perform the Legal General. But the preferred stock apears to be less risky and, when comparing its historical volatility, The Gabelli Equity is 1.46 times less risky than Legal General. The preferred stock trades about -0.18 of its potential returns per unit of risk. The Legal General Group is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,447 in Legal General Group on August 27, 2024 and sell it today you would lose (40.00) from holding Legal General Group or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Equity vs. Legal General Group
Performance |
| Timeline |
| Gabelli Equity |
| Legal General Group |
Gabelli Equity and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Equity and Legal General
The main advantage of trading using opposite Gabelli Equity and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Gabelli Equity vs. The Gabelli Equity | Gabelli Equity vs. Virtus AllianzGI Convertible | Gabelli Equity vs. Oxford Lane Capital | Gabelli Equity vs. The Gabelli Utility |
| Legal General vs. Blackstone Group | Legal General vs. BlackRock | Legal General vs. Apollo Global Management | Legal General vs. Bank of New |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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