Correlation Between BlackRock Core and GAMCO Natural

Can any of the company-specific risk be diversified away by investing in both BlackRock Core 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 Core 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 Core Bond and GAMCO Natural Resources, you can compare the effects of market volatilities on BlackRock Core 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 Core with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Core and GAMCO Natural.

Diversification Opportunities for BlackRock Core and GAMCO Natural

0.72

Correlation Coefficient

BlackRock Core  GAMCO Natural

Poor diversification

The 3 months correlation between BlackRock and GAMCO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Core Bond 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 Core 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 Core Bond 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 Core i.e., BlackRock Core and GAMCO Natural go up and down completely randomly.

Pair Corralation between BlackRock Core and GAMCO Natural

Considering the 90-day investment horizon BlackRock Core is expected to generate 3.27 times less return on investment than GAMCO Natural. But when comparing it to its historical volatility, BlackRock Core Bond is 1.16 times less risky than GAMCO Natural. It trades about 0.12 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  515.00  in GAMCO Natural Resources on December 28, 2024 and sell it today you would earn a total of  87.00  from holding GAMCO Natural Resources or generate 16.89% return on investment over 90 days.

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

BlackRock Core Bond  vs.  GAMCO Natural Resources

BlackRock Core Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Core Bond are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 27 (%) 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 Core and GAMCO Natural

The main advantage of trading using opposite BlackRock Core and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Core 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 Core Bond 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.