Correlation Between Gamco Global and Nuveen California

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

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

Diversification Opportunities for Gamco Global and Nuveen California

0.59

Correlation Coefficient

Gamco Global  Nuveen California

Very weak diversification

The 3 months correlation between Gamco and Nuveen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and Nuveen California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California and Gamco Global 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 Gamco Global Telecommunications are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California has no effect on the direction of Gamco Global i.e., Gamco Global and Nuveen California go up and down completely randomly.

Pair Corralation between Gamco Global and Nuveen California

Assuming the 90 days horizon Gamco Global is expected to generate 2.95 times less return on investment than Nuveen California. In addition to that, Gamco Global is 4.24 times more volatile than Nuveen California Municipal. It trades about 0.0 of its total potential returns per unit of risk. Nuveen California Municipal is currently generating about 0.06 per unit of volatility. If you would invest  994.00  in Nuveen California Municipal on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Nuveen California Municipal or generate 0.7% return on investment over 90 days.

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

Gamco Global Telecommunication  vs.  Nuveen California Municipal

Gamco Global Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamco Global Telecommunications 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.

Nuveen California

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gamco Global and Nuveen California

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

The idea behind Gamco Global Telecommunications and Nuveen California Municipal 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.