Correlation Between Gabelli Equity and BlackRock

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

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

Diversification Opportunities for Gabelli Equity and BlackRock

0.67

Correlation Coefficient

Gabelli Equity  BlackRock

Poor diversification

The 3 months correlation between Gabelli and BlackRock is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Gabelli Equity 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 Gabelli Equity Trust are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and BlackRock go up and down completely randomly.

Pair Corralation between Gabelli Equity and BlackRock

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 0.7 times more return on investment than BlackRock. However, Gabelli Equity Trust is 1.42 times less risky than BlackRock. It trades about -0.17 of its potential returns per unit of risk. BlackRock is currently generating about -0.26 per unit of risk. If you would invest  549.00  in Gabelli Equity Trust on January 26, 2024 and sell it today you would lose (18.00) from holding Gabelli Equity Trust or give up 3.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gabelli Equity Trust  vs.  BlackRock

Gabelli Equity Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in May 2024.

BlackRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gabelli Equity and BlackRock

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

The idea behind Gabelli Equity Trust and BlackRock 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.