Correlation Between Daily Journal and Gabelli Value

Can any of the company-specific risk be diversified away by investing in both Daily Journal and Gabelli Value 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 Daily Journal and Gabelli Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daily Journal Corp and Gabelli Value Plus, you can compare the effects of market volatilities on Daily Journal and Gabelli Value 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 Daily Journal with a short position of Gabelli Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daily Journal and Gabelli Value.

Diversification Opportunities for Daily Journal and Gabelli Value

0.6

Correlation Coefficient

Daily Journal  Gabelli Value

Poor diversification

The 3 months correlation between Daily and Gabelli is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and Gabelli Value Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Value Plus and Daily Journal 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 Daily Journal Corp are associated (or correlated) with Gabelli Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Value Plus has no effect on the direction of Daily Journal i.e., Daily Journal and Gabelli Value go up and down completely randomly.

Pair Corralation between Daily Journal and Gabelli Value

Given the investment horizon of 90 days Daily Journal Corp is expected to generate 0.3 times more return on investment than Gabelli Value. However, Daily Journal Corp is 3.29 times less risky than Gabelli Value. It trades about 0.08 of its potential returns per unit of risk. Gabelli Value Plus is currently generating about 0.02 per unit of risk. If you would invest  27,537  in Daily Journal Corp on September 6, 2024 and sell it today you would earn a total of  31,075  from holding Daily Journal Corp or generate 112.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.55%
Values	Daily Returns

Daily Journal Corp  vs.  Gabelli Value Plus

Daily Journal Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal displayed solid returns over the last few months and may actually be approaching a breakup point.

Gabelli Value Plus

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Gabelli Value Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile basic indicators, Gabelli Value reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daily Journal and Gabelli Value

The main advantage of trading using opposite Daily Journal and Gabelli Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daily Journal position performs unexpectedly, Gabelli Value 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 Value will offset losses from the drop in Gabelli Value's long position.

The idea behind Daily Journal Corp and Gabelli Value Plus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.