Correlation Between Gabelli Gold and Templeton Foreign

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

Diversification Opportunities for Gabelli Gold and Templeton Foreign

0.91

Correlation Coefficient

Gabelli Gold  Templeton Foreign

Almost no diversification

The 3 months correlation between Gabelli and Templeton is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Templeton Foreign go up and down completely randomly.

Pair Corralation between Gabelli Gold and Templeton Foreign

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 1.39 times more return on investment than Templeton Foreign. However, Gabelli Gold is 1.39 times more volatile than Templeton Foreign Fund. It trades about 0.33 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.15 per unit of risk. If you would invest  2,010  in Gabelli Gold Fund on December 30, 2024 and sell it today you would earn a total of  656.00  from holding Gabelli Gold Fund or generate 32.64% 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.  Templeton Foreign Fund

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.

Templeton Foreign

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Foreign Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Templeton Foreign may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gabelli Gold and Templeton Foreign

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

The idea behind Gabelli Gold Fund and Templeton Foreign Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.