Correlation Between Gabelli Global and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Gabelli Global and Applied Finance 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 Global and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gabelli Global Financial and Applied Finance Core, you can compare the effects of market volatilities on Gabelli Global and Applied Finance 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 Global with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Applied Finance.
Diversification Opportunities for Gabelli Global and Applied Finance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gabelli and Applied is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core and Gabelli Global 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 Global Financial are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Gabelli Global i.e., Gabelli Global and Applied Finance go up and down completely randomly.
Pair Corralation between Gabelli Global and Applied Finance
Assuming the 90 days horizon Gabelli Global Financial is expected to generate 1.32 times more return on investment than Applied Finance. However, Gabelli Global is 1.32 times more volatile than Applied Finance Core. It trades about 0.13 of its potential returns per unit of risk. Applied Finance Core is currently generating about 0.11 per unit of risk. If you would invest 1,252 in Gabelli Global Financial on September 3, 2024 and sell it today you would earn a total of 381.00 from holding Gabelli Global Financial or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gabelli Global Financial vs. Applied Finance Core
Performance |
| Timeline |
| Gabelli Global Financial |
| Applied Finance Core |
Gabelli Global and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Global and Applied Finance
The main advantage of trading using opposite Gabelli Global and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Global position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Gabelli Global vs. Ultra Short Fixed Income | Gabelli Global vs. Ms Global Fixed | Gabelli Global vs. Bbh Intermediate Municipal | Gabelli Global vs. Limited Term Tax |
| Applied Finance vs. Jhancock Short Duration | Applied Finance vs. Astor Longshort Fund | Applied Finance vs. Maryland Short Term Tax Free | Applied Finance 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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