Correlation Between Gabelli Global and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Gabelli Global and Eafe Fund 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 Eafe Fund 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 The Eafe Fund, you can compare the effects of market volatilities on Gabelli Global and Eafe Fund 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 Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Eafe Fund.
Diversification Opportunities for Gabelli Global and Eafe Fund
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gabelli and Eafe is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Financial and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund 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 Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Gabelli Global i.e., Gabelli Global and Eafe Fund go up and down completely randomly.
Pair Corralation between Gabelli Global and Eafe Fund
Assuming the 90 days horizon Gabelli Global Financial is expected to generate 0.34 times more return on investment than Eafe Fund. However, Gabelli Global Financial is 2.97 times less risky than Eafe Fund. It trades about -0.23 of its potential returns per unit of risk. The Eafe Fund is currently generating about -0.24 per unit of risk. If you would invest 1,623 in Gabelli Global Financial on October 9, 2024 and sell it today you would lose (52.00) from holding Gabelli Global Financial or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gabelli Global Financial vs. The Eafe Fund
Performance |
| Timeline |
| Gabelli Global Financial |
| Eafe Fund |
Gabelli Global and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Global and Eafe Fund
The main advantage of trading using opposite Gabelli Global and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Global position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Gabelli Global vs. Lebenthal Lisanti Small | Gabelli Global vs. Ab Small Cap | Gabelli Global vs. Ab Small Cap | Gabelli Global vs. Sp Smallcap 600 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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