Correlation Between Gabelli Healthcare and Moderate Strategy

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

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

Diversification Opportunities for Gabelli Healthcare and Moderate Strategy

0.74

Correlation Coefficient

Gabelli Healthcare  Moderate Strategy

Poor diversification

The 3 months correlation between Gabelli and Moderate is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Moderate Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Strategy and Gabelli Healthcare 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 The Gabelli Healthcare are associated (or correlated) with Moderate Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Strategy has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Moderate Strategy go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Moderate Strategy

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the Moderate Strategy. In addition to that, Gabelli Healthcare is 1.98 times more volatile than Moderate Strategy Fund. It trades about -0.05 of its total potential returns per unit of risk. Moderate Strategy Fund is currently generating about -0.02 per unit of volatility. If you would invest  974.00  in Moderate Strategy Fund on February 9, 2025 and sell it today you would lose (9.00) from holding Moderate Strategy Fund or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

The Gabelli Healthcare  vs.  Moderate Strategy Fund

The Gabelli Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gabelli Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moderate Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moderate Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Moderate Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Healthcare and Moderate Strategy

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

The idea behind The Gabelli Healthcare and Moderate Strategy Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.