Correlation Between Legal General and Gabelli Equity
Can any of the company-specific risk be diversified away by investing in both Legal General 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 Legal General and Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General Group and The Gabelli Equity, you can compare the effects of market volatilities on Legal General 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 Legal General with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Gabelli Equity.
Diversification Opportunities for Legal General and Gabelli Equity
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legal and Gabelli is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Legal General Group and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Legal General 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 Legal General Group 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 Legal General i.e., Legal General and Gabelli Equity go up and down completely randomly.
Pair Corralation between Legal General and Gabelli Equity
Assuming the 90 days horizon Legal General Group is expected to under-perform the Gabelli Equity. In addition to that, Legal General is 2.9 times more volatile than The Gabelli Equity. It trades about -0.19 of its total potential returns per unit of risk. The Gabelli Equity is currently generating about -0.23 per unit of volatility. If you would invest 2,356 in The Gabelli Equity on August 24, 2024 and sell it today you would lose (46.00) from holding The Gabelli Equity or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Legal General Group vs. The Gabelli Equity
Performance |
| Timeline |
| Legal General Group |
| Gabelli Equity |
Legal General and Gabelli Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Gabelli Equity
The main advantage of trading using opposite Legal General and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General 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.| Legal General vs. Minerals Technologies | Legal General vs. NETGEAR | Legal General vs. Skechers USA | Legal General vs. Arrow Electronics |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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