Correlation Between Gabelli Gold and Pear Tree

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

Diversification Opportunities for Gabelli Gold and Pear Tree

0.48

Correlation Coefficient

Gabelli Gold  Pear Tree

Very weak diversification

The 3 months correlation between Gabelli and Pear is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Pear Tree go up and down completely randomly.

Pair Corralation between Gabelli Gold and Pear Tree

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 2.56 times more return on investment than Pear Tree. However, Gabelli Gold is 2.56 times more volatile than Pear Tree Polaris. It trades about 0.01 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.03 per unit of risk. If you would invest  2,258  in Gabelli Gold Fund on September 12, 2024 and sell it today you would lose (1.00) from holding Gabelli Gold Fund or give up 0.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gabelli Gold Fund  vs.  Pear Tree Polaris

Gabelli Gold

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Gabelli Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gabelli Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pear Tree Polaris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pear Tree Polaris has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pear Tree 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 Pear Tree

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

The idea behind Gabelli Gold Fund and Pear Tree Polaris 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.