Correlation Between Health Care and The Gabelli

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

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

Diversification Opportunities for Health Care and The Gabelli

0.34

Correlation Coefficient

Health Care  The Gabelli

Weak diversification

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

Pair Corralation between Health Care and The Gabelli

Assuming the 90 days horizon Health Care Ultrasector is expected to under-perform the The Gabelli. In addition to that, Health Care is 1.88 times more volatile than The Gabelli Global. It trades about -0.11 of its total potential returns per unit of risk. The Gabelli Global is currently generating about 0.04 per unit of volatility. If you would invest  3,214  in The Gabelli Global on February 15, 2025 and sell it today you would earn a total of  72.00  from holding The Gabelli Global or generate 2.24% return on investment over 90 days.

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

Health Care Ultrasector  vs.  The Gabelli Global

Health Care Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Care Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Gabelli Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Global are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Health Care and The Gabelli

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

The idea behind Health Care Ultrasector and The Gabelli Global 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.