Correlation Between Nuveen California and Gabelli Equity

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

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

Diversification Opportunities for Nuveen California and Gabelli Equity

0.51

Correlation Coefficient

Nuveen California  Gabelli Equity

Very weak diversification

The 3 months correlation between Nuveen and Gabelli is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Amt 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 Nuveen California 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 Nuveen California Amt 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 Nuveen California i.e., Nuveen California and Gabelli Equity go up and down completely randomly.

Pair Corralation between Nuveen California and Gabelli Equity

Considering the 90-day investment horizon Nuveen California Amt is expected to under-perform the Gabelli Equity. In addition to that, Nuveen California is 1.01 times more volatile than Gabelli Equity Trust. It trades about -0.08 of its total potential returns per unit of risk. Gabelli Equity Trust is currently generating about -0.04 per unit of volatility. If you would invest  539.00  in Gabelli Equity Trust on February 5, 2024 and sell it today you would lose (4.00) from holding Gabelli Equity Trust or give up 0.74% of portfolio value over 90 days.

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

Nuveen California Amt  vs.  Gabelli Equity Trust

Nuveen California Amt

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Amt are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Nuveen California is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Equity Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 8 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen California and Gabelli Equity

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

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.