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 Managed, 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
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gabelli and Western is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Managed 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 Gabelli Equity is expected to generate 1.28 times less return on investment than Western Asset. But when comparing it to its historical volatility, The Gabelli Equity is 1.19 times less risky than Western Asset. It trades about 0.06 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Western Asset Managed on August 26, 2024 and sell it today you would earn a total of 129.00 from holding Western Asset Managed or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Equity vs. Western Asset Managed
Performance |
| Timeline |
| Gabelli Equity |
| Western Asset Managed |
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 Multimedia | Gabelli Equity vs. The Gabelli Dividend | Gabelli Equity vs. The Gabelli Equity |
| Western Asset vs. DTF Tax Free | Western Asset vs. MFS High Yield | Western Asset vs. MFS High Income | Western Asset vs. John Hancock Income |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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