Correlation Between Smallcap World and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Smallcap World 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 Smallcap World and The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and The Gabelli Small, you can compare the effects of market volatilities on Smallcap World 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 Smallcap World with a short position of The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and The Gabelli.
Diversification Opportunities for Smallcap World and The Gabelli
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and The is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and The Gabelli Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Small and Smallcap World 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 Smallcap World Fund 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 Small has no effect on the direction of Smallcap World i.e., Smallcap World and The Gabelli go up and down completely randomly.
Pair Corralation between Smallcap World and The Gabelli
Assuming the 90 days horizon Smallcap World is expected to generate 3.28 times less return on investment than The Gabelli. But when comparing it to its historical volatility, Smallcap World Fund is 1.19 times less risky than The Gabelli. It trades about 0.05 of its potential returns per unit of risk. The Gabelli Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,537 in The Gabelli Small on October 22, 2024 and sell it today you would earn a total of 101.00 from holding The Gabelli Small or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap World Fund vs. The Gabelli Small
Performance |
| Timeline |
| Smallcap World |
| Gabelli Small |
Smallcap World and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and The Gabelli
The main advantage of trading using opposite Smallcap World and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World 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.| Smallcap World vs. Vanguard Global Credit | Smallcap World vs. Ms Global Fixed | Smallcap World vs. Kinetics Global Fund | Smallcap World vs. Investec Global Franchise |
| The Gabelli vs. Jpmorgan Intrepid Value | The Gabelli vs. Deutsche Global Real | The Gabelli vs. Deutsche Enhanced Modity | The Gabelli vs. Smallcap World Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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