Correlation Between Gabelli Gold and Gamco International

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

Diversification Opportunities for Gabelli Gold and Gamco International

0.6

Correlation Coefficient

Gabelli Gold  Gamco International

Poor diversification

The 3 months correlation between Gabelli and Gamco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and Gamco International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco International 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 Gamco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco International has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and Gamco International go up and down completely randomly.

Pair Corralation between Gabelli Gold and Gamco International

Assuming the 90 days horizon Gabelli Gold Fund is expected to generate 1.21 times more return on investment than Gamco International. However, Gabelli Gold is 1.21 times more volatile than Gamco International Growth. It trades about 0.31 of its potential returns per unit of risk. Gamco International Growth is currently generating about 0.05 per unit of risk. If you would invest  1,830  in Gabelli Gold Fund on December 21, 2024 and sell it today you would earn a total of  529.00  from holding Gabelli Gold Fund or generate 28.91% 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.  Gamco International Growth

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 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gabelli Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Gamco International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco International Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gamco International 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 Gamco International

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

The idea behind Gabelli Gold Fund and Gamco International Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.