Correlation Between Gabelli Equity and Small Cap
Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gabelli Equity Trust and Small Cap Value, you can compare the effects of market volatilities on Gabelli Equity and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Small Cap.
Diversification Opportunities for Gabelli Equity and Small Cap
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gabelli and Small is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Gabelli Equity Trust are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Small Cap go up and down completely randomly.
Pair Corralation between Gabelli Equity and Small Cap
Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 0.71 times more return on investment than Small Cap. However, Gabelli Equity Trust is 1.4 times less risky than Small Cap. It trades about -0.13 of its potential returns per unit of risk. Small Cap Value is currently generating about -0.23 per unit of risk. If you would invest 565.00 in Gabelli Equity Trust on November 28, 2024 and sell it today you would lose (10.00) from holding Gabelli Equity Trust or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gabelli Equity Trust vs. Small Cap Value
Performance |
| Timeline |
| Gabelli Equity Trust |
| Small Cap Value |
Gabelli Equity and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Equity and Small Cap
The main advantage of trading using opposite Gabelli Equity and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Gabelli Equity vs. Gabelli Utility Closed | Gabelli Equity vs. Gabelli MultiMedia Mutual | Gabelli Equity vs. Gabelli Healthcare WellnessRx | Gabelli Equity vs. Liberty All Star |
| Small Cap vs. Glg Intl Small | Small Cap vs. Legg Mason Partners | Small Cap vs. Sp Smallcap 600 | Small Cap vs. Needham Small Cap |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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