Correlation Between Gabelli Gold and Clearbridge Small

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

Diversification Opportunities for Gabelli Gold and Clearbridge Small

-0.54

Correlation Coefficient

Gabelli Gold  Clearbridge Small

Excellent diversification

The 3 months correlation between Gabelli and Clearbridge is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Clearbridge Small go up and down completely randomly.

Pair Corralation between Gabelli Gold and Clearbridge Small

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 1.29 times more return on investment than Clearbridge Small. However, Gabelli Gold is 1.29 times more volatile than Clearbridge Small Cap. It trades about 0.33 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about -0.12 per unit of risk. If you would invest  2,020  in Gabelli Gold Fund on December 31, 2024 and sell it today you would earn a total of  646.00  from holding Gabelli Gold Fund or generate 31.98% return on investment over 90 days.

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

Gabelli Gold Fund  vs.  Clearbridge Small Cap

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.

Clearbridge Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Small Cap 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.

Pair Trading with Gabelli Gold and Clearbridge Small

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

The idea behind Gabelli Gold Fund and Clearbridge Small Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.