Correlation Between Gold Bullion and Gabelli Equity

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

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

Diversification Opportunities for Gold Bullion and Gabelli Equity

0.62

Correlation Coefficient

Gold Bullion  Gabelli Equity

Poor diversification

The 3 months correlation between Gold and Gabelli is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Gold Bullion 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 The Gold Bullion are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Gold Bullion i.e., Gold Bullion and Gabelli Equity go up and down completely randomly.

Pair Corralation between Gold Bullion and Gabelli Equity

Assuming the 90 days horizon The Gold Bullion is expected to generate 1.07 times more return on investment than Gabelli Equity. However, Gold Bullion is 1.07 times more volatile than The Gabelli Equity. It trades about 0.21 of its potential returns per unit of risk. The Gabelli Equity is currently generating about -0.02 per unit of risk. If you would invest  2,003  in The Gold Bullion on December 17, 2024 and sell it today you would earn a total of  243.00  from holding The Gold Bullion or generate 12.13% return on investment over 90 days.

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

The Gold Bullion  vs.  The Gabelli Equity

Gold Bullion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gabelli Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Gabelli Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gold Bullion and Gabelli Equity

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

The idea behind The Gold Bullion and The Gabelli Equity 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..