Correlation Between Gabelli Gold and First Eagle

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

Diversification Opportunities for Gabelli Gold and First Eagle

0.99

Correlation Coefficient

Gabelli Gold  First Eagle

No risk reduction

The 3 months correlation between Gabelli and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Gold has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and First Eagle go up and down completely randomly.

Pair Corralation between Gabelli Gold and First Eagle

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 1.04 times more return on investment than First Eagle. However, Gabelli Gold is 1.04 times more volatile than First Eagle Gold. It trades about 0.3 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.31 per unit of risk. If you would invest  2,038  in Gabelli Gold Fund on December 20, 2024 and sell it today you would earn a total of  582.00  from holding Gabelli Gold Fund or generate 28.56% return on investment over 90 days.

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

Gabelli Gold Fund  vs.  First Eagle Gold

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 23 (%) 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.

First Eagle Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gabelli Gold and First Eagle

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

The idea behind Gabelli Gold Fund and First Eagle Gold 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.