Correlation Between Federated Floating and Gamco Global

Can any of the company-specific risk be diversified away by investing in both Federated Floating and Gamco Global 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 Federated Floating and Gamco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Floating Rate and Gamco Global Growth, you can compare the effects of market volatilities on Federated Floating and Gamco Global 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 Federated Floating with a short position of Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Floating and Gamco Global.

Diversification Opportunities for Federated Floating and Gamco Global

0.72

Correlation Coefficient

Federated Floating  Gamco Global

Poor diversification

The 3 months correlation between Federated and Gamco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Federated Floating Rate and Gamco Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Growth and Federated Floating 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 Federated Floating Rate are associated (or correlated) with Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Growth has no effect on the direction of Federated Floating i.e., Federated Floating and Gamco Global go up and down completely randomly.

Pair Corralation between Federated Floating and Gamco Global

Assuming the 90 days horizon Federated Floating Rate is expected to generate 0.04 times more return on investment than Gamco Global. However, Federated Floating Rate is 28.03 times less risky than Gamco Global. It trades about -0.52 of its potential returns per unit of risk. Gamco Global Growth is currently generating about -0.24 per unit of risk. If you would invest  868.00  in Federated Floating Rate on October 15, 2024 and sell it today you would lose (4.00) from holding Federated Floating Rate or give up 0.46% of portfolio value over 90 days.

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

Federated Floating Rate  vs.  Gamco Global Growth

Federated Floating Rate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Floating Rate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gamco Global Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamco Global Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Floating and Gamco Global

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

The idea behind Federated Floating Rate and Gamco Global Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.