Correlation Between Touchstone Ultra and Gabelli Gold

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

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

Diversification Opportunities for Touchstone Ultra and Gabelli Gold

0.88

Correlation Coefficient

Touchstone Ultra  Gabelli Gold

Very poor diversification

The 3 months correlation between Touchstone and Gabelli is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Touchstone Ultra 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 Touchstone Ultra Short 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 Touchstone Ultra i.e., Touchstone Ultra and Gabelli Gold go up and down completely randomly.

Pair Corralation between Touchstone Ultra and Gabelli Gold

Assuming the 90 days horizon Touchstone Ultra is expected to generate 21.92 times less return on investment than Gabelli Gold. But when comparing it to its historical volatility, Touchstone Ultra Short is 13.53 times less risky than Gabelli Gold. It trades about 0.2 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Gabelli Gold Fund on December 28, 2024 and sell it today you would earn a total of  649.00  from holding Gabelli Gold Fund or generate 32.29% return on investment over 90 days.

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

Touchstone Ultra Short  vs.  Gabelli Gold Fund

Touchstone Ultra Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Ultra Short are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Touchstone Ultra and Gabelli Gold

The main advantage of trading using opposite Touchstone Ultra and Gabelli Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Ultra 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 Touchstone Ultra Short 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.