Correlation Between Gabelli Gold and Virginia Tax

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

Diversification Opportunities for Gabelli Gold and Virginia Tax

-0.39

Correlation Coefficient

Gabelli Gold  Virginia Tax

Very good diversification

The 3 months correlation between Gabelli and Virginia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Virginia Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia Tax Free 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 Virginia Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia Tax Free has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Virginia Tax go up and down completely randomly.

Pair Corralation between Gabelli Gold and Virginia Tax

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 10.05 times more return on investment than Virginia Tax. However, Gabelli Gold is 10.05 times more volatile than Virginia Tax Free Bond. It trades about 0.19 of its potential returns per unit of risk. Virginia Tax Free Bond is currently generating about 0.43 per unit of risk. If you would invest  2,135  in Gabelli Gold Fund on September 13, 2024 and sell it today you would earn a total of  128.00  from holding Gabelli Gold Fund or generate 6.0% return on investment over 90 days.

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

Gabelli Gold Fund  vs.  Virginia Tax Free Bond

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 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.

Virginia Tax Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia Tax Free Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virginia Tax 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 Virginia Tax

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

The idea behind Gabelli Gold Fund and Virginia Tax Free Bond 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 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.