Correlation Between Nasdaq-100(r) and Gabelli Gold
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Gabelli Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Gabelli Gold Fund, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Gabelli Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Gabelli Gold.
Diversification Opportunities for Nasdaq-100(r) and Gabelli Gold
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nasdaq-100(r) and Gabelli is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Nasdaq-100(r) i.e., Nasdaq-100(r) and Gabelli Gold go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Gabelli Gold
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.15 times more return on investment than Gabelli Gold. However, Nasdaq-100(r) is 1.15 times more volatile than Gabelli Gold Fund. It trades about 0.22 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about 0.04 per unit of risk. If you would invest 34,476 in Nasdaq 100 2x Strategy on September 10, 2024 and sell it today you would earn a total of 9,996 from holding Nasdaq 100 2x Strategy or generate 28.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Gabelli Gold Fund
Performance |
Timeline |
Nasdaq 100 2x |
Gabelli Gold |
Nasdaq-100(r) and Gabelli Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq-100(r) and Gabelli Gold
The main advantage of trading using opposite Nasdaq-100(r) and Gabelli Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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.Nasdaq-100(r) vs. Morningstar Municipal Bond | Nasdaq-100(r) vs. Franklin High Yield | Nasdaq-100(r) vs. T Rowe Price | Nasdaq-100(r) vs. Gamco Global Telecommunications |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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