Correlation Between Dynatrace Holdings and Gabelli Value

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

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

Diversification Opportunities for Dynatrace Holdings and Gabelli Value

0.69

Correlation Coefficient

Dynatrace Holdings  Gabelli Value

Poor diversification

The 3 months correlation between Dynatrace and Gabelli is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dynatrace Holdings LLC 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 Dynatrace Holdings 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 Dynatrace Holdings LLC 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 Dynatrace Holdings i.e., Dynatrace Holdings and Gabelli Value go up and down completely randomly.

Pair Corralation between Dynatrace Holdings and Gabelli Value

Allowing for the 90-day total investment horizon Dynatrace Holdings is expected to generate 1.63 times less return on investment than Gabelli Value. But when comparing it to its historical volatility, Dynatrace Holdings LLC is 3.53 times less risky than Gabelli Value. It trades about 0.05 of its potential returns per unit of risk. Gabelli Value Plus is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  680.00  in Gabelli Value Plus on September 6, 2024 and sell it today you would lose (221.00) from holding Gabelli Value Plus or give up 32.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.35%
Values	Daily Returns

Dynatrace Holdings LLC  vs.  Gabelli Value Plus

Dynatrace Holdings LLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynatrace Holdings LLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Dynatrace Holdings unveiled 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 Dynatrace Holdings and Gabelli Value

The main advantage of trading using opposite Dynatrace Holdings and Gabelli Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynatrace Holdings 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 Dynatrace Holdings LLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.