Correlation Between Gabelli Equity and GAMCO Natural

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

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

Diversification Opportunities for Gabelli Equity and GAMCO Natural

0.1

Correlation Coefficient

Gabelli Equity  GAMCO Natural

Average diversification

The 3 months correlation between Gabelli and GAMCO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust 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 Gabelli Equity 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 Gabelli Equity Trust 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 Gabelli Equity i.e., Gabelli Equity and GAMCO Natural go up and down completely randomly.

Pair Corralation between Gabelli Equity and GAMCO Natural

Considering the 90-day investment horizon Gabelli Equity Trust is expected to generate 0.76 times more return on investment than GAMCO Natural. However, Gabelli Equity Trust is 1.32 times less risky than GAMCO Natural. It trades about 0.16 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.04 per unit of risk. If you would invest  535.00  in Gabelli Equity Trust on August 31, 2024 and sell it today you would earn a total of  42.00  from holding Gabelli Equity Trust or generate 7.85% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  GAMCO Natural Resources

Gabelli Equity Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

GAMCO Natural Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GAMCO Natural is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gabelli Equity and GAMCO Natural

The main advantage of trading using opposite Gabelli Equity and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity 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 Gabelli Equity Trust 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.