Correlation Between Gabelli Global and Western Asset
Can any of the company-specific risk be diversified away by investing in both Gabelli Global 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 Global and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gabelli Global Small and Western Asset Managed, you can compare the effects of market volatilities on Gabelli Global 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 Global with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Global and Western Asset.
Diversification Opportunities for Gabelli Global and Western Asset
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gabelli and Western is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Global Small 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 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 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 Managed has no effect on the direction of Gabelli Global i.e., Gabelli Global and Western Asset go up and down completely randomly.
Pair Corralation between Gabelli Global and Western Asset
Considering the 90-day investment horizon Gabelli Global Small is expected to generate 1.69 times more return on investment than Western Asset. However, Gabelli Global is 1.69 times more volatile than Western Asset Managed. It trades about 0.32 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.23 per unit of risk. If you would invest 1,216 in Gabelli Global Small on September 1, 2024 and sell it today you would earn a total of 89.00 from holding Gabelli Global Small or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gabelli Global Small vs. Western Asset Managed
Performance |
| Timeline |
| Gabelli Global Small |
| Western Asset Managed |
Gabelli Global and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Global and Western Asset
The main advantage of trading using opposite Gabelli Global and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Global 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.| Gabelli Global vs. MFS Investment Grade | Gabelli Global vs. Invesco High Income | Gabelli Global vs. Eaton Vance National | Gabelli Global vs. Nuveen California Select |
| Western Asset vs. Western Asset Municipal | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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