Correlation Between The Gabelli and American Funds
Can any of the company-specific risk be diversified away by investing in both The Gabelli and American Funds 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 The Gabelli and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gabelli Small and American Funds 2065, you can compare the effects of market volatilities on The Gabelli and American Funds 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 The Gabelli with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gabelli and American Funds.
Diversification Opportunities for The Gabelli and American Funds
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between The and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 and The Gabelli 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 Small are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of The Gabelli i.e., The Gabelli and American Funds go up and down completely randomly.
Pair Corralation between The Gabelli and American Funds
Assuming the 90 days horizon The Gabelli Small is expected to generate 2.25 times more return on investment than American Funds. However, The Gabelli is 2.25 times more volatile than American Funds 2065. It trades about 0.31 of its potential returns per unit of risk. American Funds 2065 is currently generating about 0.24 per unit of risk. If you would invest 4,329 in The Gabelli Small on September 2, 2024 and sell it today you would earn a total of 386.00 from holding The Gabelli Small or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Small vs. American Funds 2065
Performance |
| Timeline |
| Gabelli Small |
| American Funds 2065 |
The Gabelli and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gabelli and American Funds
The main advantage of trading using opposite The Gabelli and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gabelli position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| The Gabelli vs. The Gabelli Asset | The Gabelli vs. The Gabelli Equity | The Gabelli vs. The Gabelli Growth | The Gabelli vs. Parnassus E Equity |
| American Funds vs. Legg Mason Partners | American Funds vs. Prudential Government Money | American Funds vs. Transamerica Funds | American Funds vs. Meeder Funds |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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