Correlation Between Aggressive Growth and Gabelli Gold

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

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

Diversification Opportunities for Aggressive Growth and Gabelli Gold

-0.32

Correlation Coefficient

Aggressive Growth  Gabelli Gold

Very good diversification

The 3 months correlation between Aggressive and Gabelli is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth i.e., Aggressive Growth and Gabelli Gold go up and down completely randomly.

Pair Corralation between Aggressive Growth and Gabelli Gold

Assuming the 90 days horizon Aggressive Growth Portfolio is expected to generate 0.72 times more return on investment than Gabelli Gold. However, Aggressive Growth Portfolio is 1.39 times less risky than Gabelli Gold. It trades about 0.15 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about -0.01 per unit of risk. If you would invest  9,545  in Aggressive Growth Portfolio on September 15, 2024 and sell it today you would earn a total of  1,075  from holding Aggressive Growth Portfolio or generate 11.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Aggressive Growth Portfolio  vs.  Gabelli Gold Fund

Aggressive Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Portfolio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Aggressive Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Aggressive Growth and Gabelli Gold

The main advantage of trading using opposite Aggressive Growth and Gabelli Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth 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 Aggressive Growth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.