Correlation Between EnLink Midstream and Gabelli Equity

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

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

Diversification Opportunities for EnLink Midstream and Gabelli Equity

0.75

Correlation Coefficient

EnLink Midstream  Gabelli Equity

Poor diversification

The 3 months correlation between EnLink and Gabelli is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC 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 EnLink Midstream 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 EnLink Midstream LLC 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 EnLink Midstream i.e., EnLink Midstream and Gabelli Equity go up and down completely randomly.

Pair Corralation between EnLink Midstream and Gabelli Equity

Given the investment horizon of 90 days EnLink Midstream LLC is expected to generate 1.32 times more return on investment than Gabelli Equity. However, EnLink Midstream is 1.32 times more volatile than Gabelli Equity Trust. It trades about 0.19 of its potential returns per unit of risk. Gabelli Equity Trust is currently generating about 0.09 per unit of risk. If you would invest  1,181  in EnLink Midstream LLC on January 20, 2024 and sell it today you would earn a total of  167.00  from holding EnLink Midstream LLC or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

EnLink Midstream LLC  vs.  Gabelli Equity Trust

EnLink Midstream LLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EnLink Midstream LLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, EnLink Midstream exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gabelli Equity Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Gabelli Equity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EnLink Midstream and Gabelli Equity

The main advantage of trading using opposite EnLink Midstream and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnLink Midstream 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.

The idea behind EnLink Midstream LLC and Gabelli Equity Trust 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.