Correlation Between Gabelli Equity and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Northern Lights 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 Lights 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 Northern Lights, you can compare the effects of market volatilities on Gabelli Equity and Northern Lights 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 Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Northern Lights.
Diversification Opportunities for Gabelli Equity and Northern Lights
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gabelli and Northern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Northern Lights go up and down completely randomly.
Pair Corralation between Gabelli Equity and Northern Lights
Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 1.36 times more return on investment than Northern Lights. However, Gabelli Equity is 1.36 times more volatile than Northern Lights. It trades about 0.1 of its potential returns per unit of risk. Northern Lights is currently generating about 0.09 per unit of risk. If you would invest 519.00 in Gabelli Equity Trust on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Gabelli Equity Trust or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Gabelli Equity Trust vs. Northern Lights
Performance |
| Timeline |
| Gabelli Equity Trust |
| Northern Lights |
Gabelli Equity and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Equity and Northern Lights
The main advantage of trading using opposite Gabelli Equity and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity position performs unexpectedly, Northern Lights 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 Lights will offset losses from the drop in Northern Lights' 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 |
| Northern Lights vs. Us Strategic Equity | Northern Lights vs. Cutler Equity | Northern Lights vs. Us Vector Equity | Northern Lights vs. Artisan Select Equity |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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