Correlation Between Tidewater and Gabelli Equity

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

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

Diversification Opportunities for Tidewater and Gabelli Equity

0.69

Correlation Coefficient

Tidewater  Gabelli Equity

Poor diversification

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

Pair Corralation between Tidewater and Gabelli Equity

Considering the 90-day investment horizon Tidewater is expected to generate 2.5 times more return on investment than Gabelli Equity. However, Tidewater is 2.5 times more volatile than Gabelli Equity Trust. It trades about 0.1 of its potential returns per unit of risk. Gabelli Equity Trust is currently generating about 0.0 per unit of risk. If you would invest  2,199  in Tidewater on January 24, 2024 and sell it today you would earn a total of  6,727  from holding Tidewater or generate 305.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Tidewater  vs.  Gabelli Equity Trust

Tidewater

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Tidewater showed solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Tidewater and Gabelli Equity

The main advantage of trading using opposite Tidewater and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidewater 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 Tidewater 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.