Correlation Between Gabelli Equity and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on Gabelli Equity and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Northern Trust.
Diversification Opportunities for Gabelli Equity and Northern Trust
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gabelli and Northern is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Northern Trust go up and down completely randomly.
Pair Corralation between Gabelli Equity and Northern Trust
Assuming the 90 days trading horizon The Gabelli Equity is expected to generate 0.32 times more return on investment than Northern Trust. However, The Gabelli Equity is 3.17 times less risky than Northern Trust. It trades about -0.24 of its potential returns per unit of risk. Northern Trust is currently generating about -0.16 per unit of risk. If you would invest 2,358 in The Gabelli Equity on August 28, 2024 and sell it today you would lose (48.00) from holding The Gabelli Equity or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Equity vs. Northern Trust
Performance |
| Timeline |
| Gabelli Equity |
| Northern Trust |
Gabelli Equity and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Equity and Northern Trust
The main advantage of trading using opposite Gabelli Equity and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust'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 |
| Northern Trust vs. Fifth Third Bancorp | Northern Trust vs. First Citizens BancShares | Northern Trust vs. Arch Capital Group | Northern Trust vs. Merchants Bancorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |