Correlation Between Embark Commodity and Gabelli Gold

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

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

Diversification Opportunities for Embark Commodity and Gabelli Gold

0.88

Correlation Coefficient

Embark Commodity  Gabelli Gold

Very poor diversification

The 3 months correlation between Embark and Gabelli is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Embark Commodity Strategy and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Embark Commodity 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 Embark Commodity Strategy are associated (or correlated) with Gabelli Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Gold has no effect on the direction of Embark Commodity i.e., Embark Commodity and Gabelli Gold go up and down completely randomly.

Pair Corralation between Embark Commodity and Gabelli Gold

Assuming the 90 days horizon Embark Commodity is expected to generate 3.66 times less return on investment than Gabelli Gold. But when comparing it to its historical volatility, Embark Commodity Strategy is 2.27 times less risky than Gabelli Gold. It trades about 0.2 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Gabelli Gold Fund on December 29, 2024 and sell it today you would earn a total of  649.00  from holding Gabelli Gold Fund or generate 32.29% return on investment over 90 days.

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

Embark Commodity Strategy  vs.  Gabelli Gold Fund

Embark Commodity Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Commodity Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Embark Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gabelli Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Gold Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embark Commodity and Gabelli Gold

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

The idea behind Embark Commodity Strategy and Gabelli Gold 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 Transaction History module to view history of all your transactions and understand their impact on performance.