Correlation Between GM and The Gabelli
Can any of the company-specific risk be diversified away by investing in both GM and The Gabelli 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 GM and The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and The Gabelli Growth, you can compare the effects of market volatilities on GM and The Gabelli 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 GM with a short position of The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and The Gabelli.
Diversification Opportunities for GM and The Gabelli
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and The is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth and GM 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 General Motors are associated (or correlated) with The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of GM i.e., GM and The Gabelli go up and down completely randomly.
Pair Corralation between GM and The Gabelli
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.65 times more return on investment than The Gabelli. However, GM is 1.65 times more volatile than The Gabelli Growth. It trades about 0.14 of its potential returns per unit of risk. The Gabelli Growth is currently generating about 0.11 per unit of risk. If you would invest 3,135 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,718 from holding General Motors or generate 86.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. The Gabelli Growth
Performance |
| Timeline |
| General Motors |
| Gabelli Growth |
GM and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and The Gabelli
The main advantage of trading using opposite GM and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, The Gabelli 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 The Gabelli will offset losses from the drop in The Gabelli's long position.The idea behind General Motors and The Gabelli Growth 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.| The Gabelli vs. Gabelli Esg Fund | The Gabelli vs. Gabelli Global Financial | The Gabelli vs. The Gabelli Equity | The Gabelli vs. Gamco International Growth |
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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