Correlation Between Gabelli Gold and American Beacon
Can any of the company-specific risk be diversified away by investing in both Gabelli Gold and American Beacon 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 American Beacon 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 American Beacon Small, you can compare the effects of market volatilities on Gabelli Gold and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Gold and American Beacon.
Diversification Opportunities for Gabelli Gold and American Beacon
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gabelli and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Gold Fund and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Gabelli Gold i.e., Gabelli Gold and American Beacon go up and down completely randomly.
Pair Corralation between Gabelli Gold and American Beacon
Assuming the 90 days horizon Gabelli Gold Fund is expected to under-perform the American Beacon. In addition to that, Gabelli Gold is 18.45 times more volatile than American Beacon Small. It trades about -0.15 of its total potential returns per unit of risk. American Beacon Small is currently generating about -0.11 per unit of volatility. If you would invest 2,149 in American Beacon Small on September 1, 2024 and sell it today you would lose (5.00) from holding American Beacon Small or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gabelli Gold Fund vs. American Beacon Small
Performance |
| Timeline |
| Gabelli Gold |
| American Beacon Small |
Gabelli Gold and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Gold and American Beacon
The main advantage of trading using opposite Gabelli Gold and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Gold position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Gabelli Gold vs. Legg Mason Bw | Gabelli Gold vs. American Mutual Fund | Gabelli Gold vs. Transamerica Large Cap | Gabelli Gold vs. Fundamental Large Cap |
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Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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