Correlation Between Western Asset and Gabelli Equity
Can any of the company-specific risk be diversified away by investing in both Western Asset and Gabelli Equity 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 Western Asset and Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and The Gabelli Equity, you can compare the effects of market volatilities on Western Asset and Gabelli Equity 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 Western Asset with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Gabelli Equity.
Diversification Opportunities for Western Asset and Gabelli Equity
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Gabelli is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Western Asset 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 Western Asset High are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Western Asset i.e., Western Asset and Gabelli Equity go up and down completely randomly.
Pair Corralation between Western Asset and Gabelli Equity
Considering the 90-day investment horizon Western Asset High is expected to generate 1.07 times more return on investment than Gabelli Equity. However, Western Asset is 1.07 times more volatile than The Gabelli Equity. It trades about 0.06 of its potential returns per unit of risk. The Gabelli Equity is currently generating about -0.17 per unit of risk. If you would invest 391.00 in Western Asset High on August 24, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset High or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. The Gabelli Equity
Performance |
| Timeline |
| Western Asset High |
| Gabelli Equity |
Western Asset and Gabelli Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Gabelli Equity
The main advantage of trading using opposite Western Asset and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Gabelli Equity 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 Gabelli Equity will offset losses from the drop in Gabelli Equity's long position.| Western Asset vs. Tekla Healthcare Investors | Western Asset vs. Blackrock Enhanced Capital | Western Asset vs. Tekla Life Sciences | Western Asset vs. Nuveen New York |
| Gabelli Equity vs. The Gabelli Equity | Gabelli Equity vs. Virtus AllianzGI Convertible | Gabelli Equity vs. Oxford Lane Capital | Gabelli Equity vs. The Gabelli Utility |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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