Correlation Between Gabelli Gold and Morgan Stanley

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

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

Diversification Opportunities for Gabelli Gold and Morgan Stanley

-0.63

Correlation Coefficient

Gabelli Gold  Morgan Stanley

Excellent diversification

The 3 months correlation between Gabelli and Morgan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi and Gabelli Gold 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 Gold Fund are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Multi has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Morgan Stanley go up and down completely randomly.

Pair Corralation between Gabelli Gold and Morgan Stanley

Assuming the 90 days horizon Gabelli Gold Fund is expected to under-perform the Morgan Stanley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gabelli Gold Fund is 1.25 times less risky than Morgan Stanley. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Morgan Stanley Multi is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,110  in Morgan Stanley Multi on October 10, 2024 and sell it today you would lose (154.00) from holding Morgan Stanley Multi or give up 3.75% of portfolio value over 90 days.

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

Gabelli Gold Fund  vs.  Morgan Stanley Multi

Gabelli Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabelli Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Morgan Stanley Multi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Multi are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Morgan Stanley showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Gold and Morgan Stanley

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

The idea behind Gabelli Gold Fund and Morgan Stanley Multi 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.