Correlation Between Ellsworth Convertible and Gabelli Healthcare

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

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

Diversification Opportunities for Ellsworth Convertible and Gabelli Healthcare

0.65

Correlation Coefficient

Ellsworth Convertible  Gabelli Healthcare

Poor diversification

The 3 months correlation between Ellsworth and Gabelli is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ellsworth Convertible Growth and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare and Ellsworth Convertible 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 Ellsworth Convertible Growth are associated (or correlated) with Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Ellsworth Convertible i.e., Ellsworth Convertible and Gabelli Healthcare go up and down completely randomly.

Pair Corralation between Ellsworth Convertible and Gabelli Healthcare

Considering the 90-day investment horizon Ellsworth Convertible Growth is expected to generate 0.86 times more return on investment than Gabelli Healthcare. However, Ellsworth Convertible Growth is 1.16 times less risky than Gabelli Healthcare. It trades about 0.22 of its potential returns per unit of risk. The Gabelli Healthcare is currently generating about 0.04 per unit of risk. If you would invest  753.00  in Ellsworth Convertible Growth on July 11, 2024 and sell it today you would earn a total of  175.00  from holding Ellsworth Convertible Growth or generate 23.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Ellsworth Convertible Growth  vs.  The Gabelli Healthcare

Ellsworth Convertible

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ellsworth Convertible Growth are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ellsworth Convertible may actually be approaching a critical reversion point that can send shares even higher in November 2024.

The Gabelli Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Healthcare are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ellsworth Convertible and Gabelli Healthcare

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

The idea behind Ellsworth Convertible Growth and The Gabelli Healthcare 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.