Correlation Between Secured Options and Gabelli Gold

Can any of the company-specific risk be diversified away by investing in both Secured Options and Gabelli Gold 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 Secured Options and Gabelli Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Secured Options Portfolio and Gabelli Gold Fund, you can compare the effects of market volatilities on Secured Options and Gabelli Gold 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 Secured Options with a short position of Gabelli Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secured Options and Gabelli Gold.

Diversification Opportunities for Secured Options and Gabelli Gold

0.26

Correlation Coefficient

Secured Options  Gabelli Gold

Modest diversification

The 3 months correlation between Secured and Gabelli is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Secured Options Portfolio and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Secured Options 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 Secured Options Portfolio are associated (or correlated) with Gabelli Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Gold has no effect on the direction of Secured Options i.e., Secured Options and Gabelli Gold go up and down completely randomly.

Pair Corralation between Secured Options and Gabelli Gold

Assuming the 90 days horizon Secured Options is expected to generate 5.06 times less return on investment than Gabelli Gold. But when comparing it to its historical volatility, Secured Options Portfolio is 4.19 times less risky than Gabelli Gold. It trades about 0.22 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,040  in Gabelli Gold Fund on October 24, 2024 and sell it today you would earn a total of  134.00  from holding Gabelli Gold Fund or generate 6.57% return on investment over 90 days.

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

Secured Options Portfolio  vs.  Gabelli Gold Fund

Secured Options Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secured Options Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Secured Options and Gabelli Gold

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

The idea behind Secured Options Portfolio and Gabelli Gold 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.