Correlation Between Prudential California and Gabelli Gold
Can any of the company-specific risk be diversified away by investing in both Prudential California 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 Prudential California and Gabelli Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Gabelli Gold Fund, you can compare the effects of market volatilities on Prudential California 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 Prudential California with a short position of Gabelli Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Gabelli Gold.
Diversification Opportunities for Prudential California and Gabelli Gold
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prudential and Gabelli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Gabelli Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Gold and Prudential California 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 Prudential California Muni 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 Prudential California i.e., Prudential California and Gabelli Gold go up and down completely randomly.
Pair Corralation between Prudential California and Gabelli Gold
Assuming the 90 days horizon Prudential California is expected to generate 5.95 times less return on investment than Gabelli Gold. But when comparing it to its historical volatility, Prudential California Muni is 27.34 times less risky than Gabelli Gold. It trades about 0.38 of its potential returns per unit of risk. Gabelli Gold Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,044 in Gabelli Gold Fund on March 30, 2025 and sell it today you would earn a total of 85.00 from holding Gabelli Gold Fund or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Gabelli Gold Fund
Performance |
| Timeline |
| Prudential California |
| Gabelli Gold |
Prudential California and Gabelli Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential California and Gabelli Gold
The main advantage of trading using opposite Prudential California and Gabelli Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California 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 Prudential California Muni 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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