Correlation Between Gabelli Gold and Northern Emerging

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

Diversification Opportunities for Gabelli Gold and Northern Emerging

0.68

Correlation Coefficient

Gabelli Gold  Northern Emerging

Poor diversification

The 3 months correlation between Gabelli and Northern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Northern Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Emerging Markets 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 Northern Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Emerging Markets has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Northern Emerging go up and down completely randomly.

Pair Corralation between Gabelli Gold and Northern Emerging

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 1.56 times more return on investment than Northern Emerging. However, Gabelli Gold is 1.56 times more volatile than Northern Emerging Markets. It trades about 0.29 of its potential returns per unit of risk. Northern Emerging Markets is currently generating about 0.09 per unit of risk. If you would invest  2,040  in Gabelli Gold Fund on December 23, 2024 and sell it today you would earn a total of  569.00  from holding Gabelli Gold Fund or generate 27.89% return on investment over 90 days.

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

Gabelli Gold Fund  vs.  Northern Emerging Markets

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 22 (%) 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.

Northern Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Northern Emerging 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 Gold and Northern Emerging

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

The idea behind Gabelli Gold Fund and Northern Emerging Markets 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.