Correlation Between Gabelli Multimedia and Western Asset

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Can any of the company-specific risk be diversified away by investing in both Gabelli Multimedia 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 Gabelli Multimedia 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 Multimedia and Western Asset Managed, you can compare the effects of market volatilities on Gabelli Multimedia 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 Gabelli Multimedia with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Multimedia and Western Asset.

Diversification Opportunities for Gabelli Multimedia and Western Asset

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Gabelli and Western is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed and Gabelli Multimedia 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 Multimedia 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 Managed has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and Western Asset go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Western Asset

Assuming the 90 days trading horizon The Gabelli Multimedia is expected to under-perform the Western Asset. But the preferred stock apears to be less risky and, when comparing its historical volatility, The Gabelli Multimedia is 1.25 times less risky than Western Asset. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Western Asset Managed is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,027  in Western Asset Managed on August 29, 2024 and sell it today you would earn a total of  36.00  from holding Western Asset Managed or generate 3.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

The Gabelli Multimedia  vs.  Western Asset Managed

 Performance 
       Timeline  
The Gabelli Multimedia 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Multimedia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Western Asset Managed 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Asset Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gabelli Multimedia and Western Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gabelli Multimedia and Western Asset

The main advantage of trading using opposite Gabelli Multimedia and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Multimedia 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 idea behind The Gabelli Multimedia and Western Asset Managed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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