Correlation Between Gabelli Value and LifeSpeak

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Can any of the company-specific risk be diversified away by investing in both Gabelli Value and LifeSpeak 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 Value and LifeSpeak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gabelli Value Plus and LifeSpeak, you can compare the effects of market volatilities on Gabelli Value and LifeSpeak 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 Value with a short position of LifeSpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Value and LifeSpeak.

Diversification Opportunities for Gabelli Value and LifeSpeak

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gabelli and LifeSpeak is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Value Plus and LifeSpeak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSpeak and Gabelli Value 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 Value Plus are associated (or correlated) with LifeSpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSpeak has no effect on the direction of Gabelli Value i.e., Gabelli Value and LifeSpeak go up and down completely randomly.

Pair Corralation between Gabelli Value and LifeSpeak

Considering the 90-day investment horizon Gabelli Value Plus is expected to generate 1.26 times more return on investment than LifeSpeak. However, Gabelli Value is 1.26 times more volatile than LifeSpeak. It trades about 0.02 of its potential returns per unit of risk. LifeSpeak is currently generating about 0.0 per unit of risk. 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.35%
ValuesDaily Returns

Gabelli Value Plus  vs.  LifeSpeak

 Performance 
       Timeline  
Gabelli Value Plus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
LifeSpeak 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gabelli Value and LifeSpeak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gabelli Value and LifeSpeak

The main advantage of trading using opposite Gabelli Value and LifeSpeak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Value position performs unexpectedly, LifeSpeak 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 LifeSpeak will offset losses from the drop in LifeSpeak's long position.
The idea behind Gabelli Value Plus and LifeSpeak 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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