Correlation Between Western Asset and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and The Gabelli Small, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and The Gabelli.
Diversification Opportunities for Western Asset and The Gabelli
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and The is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and The Gabelli Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Small 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 Diversified 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 Western Asset i.e., Western Asset and The Gabelli go up and down completely randomly.
Pair Corralation between Western Asset and The Gabelli
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the The Gabelli. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 5.06 times less risky than The Gabelli. The mutual fund trades about -0.04 of its potential returns per unit of risk. The The Gabelli Small is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,483 in The Gabelli Small on September 2, 2024 and sell it today you would earn a total of 232.00 from holding The Gabelli Small or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. The Gabelli Small
Performance |
| Timeline |
| Western Asset Diversified |
| Gabelli Small |
Western Asset and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and The Gabelli
The main advantage of trading using opposite Western Asset and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
| The Gabelli vs. The Gabelli Asset | The Gabelli vs. The Gabelli Equity | The Gabelli vs. The Gabelli Growth | The Gabelli vs. Parnassus E Equity |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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