Correlation Between Aquagold International and GAMCO Natural

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

By analyzing existing cross correlation between Aquagold International and GAMCO Natural Resources, you can compare the effects of market volatilities on Aquagold International and GAMCO Natural 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 Aquagold International with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and GAMCO Natural.

Diversification Opportunities for Aquagold International and GAMCO Natural

0.48

Correlation Coefficient

Aquagold International  GAMCO Natural

Very weak diversification

The 3 months correlation between Aquagold and GAMCO is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources and Aquagold 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 Aquagold International are associated (or correlated) with GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Aquagold International i.e., Aquagold International and GAMCO Natural go up and down completely randomly.

Pair Corralation between Aquagold International and GAMCO Natural

Given the investment horizon of 90 days Aquagold International is expected to under-perform the GAMCO Natural. In addition to that, Aquagold International is 30.08 times more volatile than GAMCO Natural Resources. It trades about -0.22 of its total potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.07 per unit of volatility. If you would invest  2,216  in GAMCO Natural Resources on October 6, 2024 and sell it today you would lose (22.00) from holding GAMCO Natural Resources or give up 0.99% of portfolio value over 90 days.

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

Aquagold International  vs.  GAMCO Natural Resources

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aquagold International and GAMCO Natural

The main advantage of trading using opposite Aquagold International and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, GAMCO Natural 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 GAMCO Natural will offset losses from the drop in GAMCO Natural's long position.

The idea behind Aquagold International and GAMCO Natural Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.