Correlation Between The Gabelli and Western Asset
Can any of the company-specific risk be diversified away by investing in both The Gabelli 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 The Gabelli 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 Small and Western Asset Smash, you can compare the effects of market volatilities on The Gabelli 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 The Gabelli with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gabelli and Western Asset.
Diversification Opportunities for The Gabelli and Western Asset
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between The and Western is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Small and Western Asset Smash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Smash 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 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 Smash has no effect on the direction of The Gabelli i.e., The Gabelli and Western Asset go up and down completely randomly.
Pair Corralation between The Gabelli and Western Asset
Assuming the 90 days horizon The Gabelli Small is expected to generate 5.26 times more return on investment than Western Asset. However, The Gabelli is 5.26 times more volatile than Western Asset Smash. It trades about 0.09 of its potential returns per unit of risk. Western Asset Smash is currently generating about 0.18 per unit of risk. If you would invest 3,655 in The Gabelli Small on September 1, 2024 and sell it today you would earn a total of 1,037 from holding The Gabelli Small or generate 28.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
The Gabelli Small vs. Western Asset Smash
Performance |
| Timeline |
| Gabelli Small |
| Western Asset Smash |
The Gabelli and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gabelli and Western Asset
The main advantage of trading using opposite The Gabelli and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gabelli 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.| The Gabelli vs. The Gabelli Asset | The Gabelli vs. The Gabelli Equity | The Gabelli vs. The Gabelli Growth | The Gabelli vs. Parnassus E Equity |
| Western Asset vs. Federated Ultrashort Bond | Western Asset vs. Aqr Long Short Equity | Western Asset vs. Quantitative Longshort Equity | Western Asset vs. Touchstone Ultra Short |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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