Correlation Between BlackRock Energy and GAMCO Natural

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

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

Diversification Opportunities for BlackRock Energy and GAMCO Natural

0.78

Correlation Coefficient

BlackRock Energy  GAMCO Natural

Poor diversification

The 3 months correlation between BlackRock and GAMCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Energy and 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 BlackRock Energy 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 BlackRock Energy and 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 BlackRock Energy i.e., BlackRock Energy and GAMCO Natural go up and down completely randomly.

Pair Corralation between BlackRock Energy and GAMCO Natural

Considering the 90-day investment horizon BlackRock Energy is expected to generate 1.44 times less return on investment than GAMCO Natural. In addition to that, BlackRock Energy is 1.12 times more volatile than GAMCO Natural Resources. It trades about 0.15 of its total potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.25 per unit of volatility. If you would invest  526.00  in GAMCO Natural Resources on December 22, 2024 and sell it today you would earn a total of  68.00  from holding GAMCO Natural Resources or generate 12.93% return on investment over 90 days.

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

BlackRock Energy and  vs.  GAMCO Natural Resources

BlackRock Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical and fundamental indicators, BlackRock Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GAMCO Natural Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, GAMCO Natural unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock Energy and GAMCO Natural

The main advantage of trading using opposite BlackRock Energy and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Energy 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 BlackRock Energy and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.