Correlation Between Invesco International and Gabelli Gold

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

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

Diversification Opportunities for Invesco International and Gabelli Gold

0.6

Correlation Coefficient

Invesco International  Gabelli Gold

Poor diversification

The 3 months correlation between Invesco and Gabelli is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Growth and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Invesco International 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 Invesco International Growth 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 Invesco International i.e., Invesco International and Gabelli Gold go up and down completely randomly.

Pair Corralation between Invesco International and Gabelli Gold

Assuming the 90 days horizon Invesco International Growth is expected to under-perform the Gabelli Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco International Growth is 1.44 times less risky than Gabelli Gold. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Gabelli Gold Fund is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,386  in Gabelli Gold Fund on September 26, 2024 and sell it today you would lose (303.00) from holding Gabelli Gold Fund or give up 12.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Invesco International Growth  vs.  Gabelli Gold Fund

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing 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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Invesco International and Gabelli Gold

The main advantage of trading using opposite Invesco International and Gabelli Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco International 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 Invesco International Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.