Correlation Between Innovativ Media and Gabelli Value

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

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

Diversification Opportunities for Innovativ Media and Gabelli Value

0.01

Correlation Coefficient

Innovativ Media  Gabelli Value

Significant diversification

The 3 months correlation between Innovativ and Gabelli is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Innovativ Media Group 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 Innovativ Media 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 Innovativ Media Group 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 Innovativ Media i.e., Innovativ Media and Gabelli Value go up and down completely randomly.

Pair Corralation between Innovativ Media and Gabelli Value

Given the investment horizon of 90 days Innovativ Media Group is expected to generate 1.57 times more return on investment than Gabelli Value. However, Innovativ Media is 1.57 times more volatile than Gabelli Value Plus. It trades about 0.04 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  0.49  in Innovativ Media Group on September 6, 2024 and sell it today you would lose (0.04) from holding Innovativ Media Group or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	7.84%
Values	Daily Returns

Innovativ Media Group  vs.  Gabelli Value Plus

Innovativ Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovativ Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Innovativ Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Innovativ Media and Gabelli Value

The main advantage of trading using opposite Innovativ Media and Gabelli Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovativ Media 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 Innovativ Media Group 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.