Correlation Between Gabelli Equity and Liberty All

Can any of the company-specific risk be diversified away by investing in both Gabelli Equity and Liberty All 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 Liberty All 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 Liberty All Star, you can compare the effects of market volatilities on Gabelli Equity and Liberty All 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 Liberty All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Equity and Liberty All.

Diversification Opportunities for Gabelli Equity and Liberty All

0.87

Correlation Coefficient

Gabelli Equity  Liberty All

Very poor diversification

The 3 months correlation between Gabelli and Liberty is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Liberty All Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty All Star 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 Liberty All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty All Star has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Liberty All go up and down completely randomly.

Pair Corralation between Gabelli Equity and Liberty All

Considering the 90-day investment horizon Gabelli Equity is expected to generate 2.19 times less return on investment than Liberty All. But when comparing it to its historical volatility, Gabelli Equity Trust is 1.11 times less risky than Liberty All. It trades about 0.05 of its potential returns per unit of risk. Liberty All Star is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Liberty All Star on July 30, 2024 and sell it today you would earn a total of  33.00  from holding Liberty All Star or generate 6.19% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Liberty All Star

Gabelli Equity Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 3 (%) 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.

Liberty All Star

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty All Star are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Liberty All is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gabelli Equity and Liberty All

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

The idea behind Gabelli Equity Trust and Liberty All Star 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.