Correlation Between Steward Small and Gabelli Equity
Can any of the company-specific risk be diversified away by investing in both Steward Small 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 Steward Small and Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steward Small Mid Cap and Gabelli Equity Trust, you can compare the effects of market volatilities on Steward Small 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 Steward Small with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Small and Gabelli Equity.
Diversification Opportunities for Steward Small and Gabelli Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steward and Gabelli is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Steward Small Mid Cap and Gabelli Equity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Trust and Steward Small 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 Steward Small Mid Cap 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 Trust has no effect on the direction of Steward Small i.e., Steward Small and Gabelli Equity go up and down completely randomly.
Pair Corralation between Steward Small and Gabelli Equity
Assuming the 90 days horizon Steward Small Mid Cap is expected to generate 1.81 times more return on investment than Gabelli Equity. However, Steward Small is 1.81 times more volatile than Gabelli Equity Trust. It trades about 0.31 of its potential returns per unit of risk. Gabelli Equity Trust is currently generating about 0.47 per unit of risk. If you would invest 1,173 in Steward Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 112.00 from holding Steward Small Mid Cap or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steward Small Mid Cap vs. Gabelli Equity Trust
Performance |
| Timeline |
| Steward Small Mid |
| Gabelli Equity Trust |
Steward Small and Gabelli Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Small and Gabelli Equity
The main advantage of trading using opposite Steward Small and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Small 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.| Steward Small vs. Steward Small Mid Cap | Steward Small vs. Steward Ered Call | Steward Small vs. Steward Ered Call | Steward Small vs. Steward Ered Call |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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