Correlation Between Gamco Global and Ivy Core

Can any of the company-specific risk be diversified away by investing in both Gamco Global and Ivy Core 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 Ivy Core 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 Ivy E Equity, you can compare the effects of market volatilities on Gamco Global and Ivy Core 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 Ivy Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Ivy Core.

Diversification Opportunities for Gamco Global and Ivy Core

0.89

Correlation Coefficient

Gamco Global  Ivy Core

Very poor diversification

The 3 months correlation between Gamco and Ivy is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and Ivy E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy E Equity 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 Ivy Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy E Equity has no effect on the direction of Gamco Global i.e., Gamco Global and Ivy Core go up and down completely randomly.

Pair Corralation between Gamco Global and Ivy Core

Assuming the 90 days horizon Gamco Global Telecommunications is expected to generate 0.75 times more return on investment than Ivy Core. However, Gamco Global Telecommunications is 1.33 times less risky than Ivy Core. It trades about 0.14 of its potential returns per unit of risk. Ivy E Equity is currently generating about 0.09 per unit of risk. If you would invest  1,812  in Gamco Global Telecommunications on September 4, 2024 and sell it today you would earn a total of  537.00  from holding Gamco Global Telecommunications or generate 29.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Gamco Global Telecommunication  vs.  Ivy E Equity

Gamco Global Telecom

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Telecommunications are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ivy E Equity

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy E Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ivy Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco Global and Ivy Core

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

The idea behind Gamco Global Telecommunications and Ivy E Equity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.