Correlation Between Gamco Global and Mfs Utilities

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

By analyzing existing cross correlation between The Gamco Global and Mfs Utilities Fund, you can compare the effects of market volatilities on Gamco Global and Mfs Utilities 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 Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Mfs Utilities.

Diversification Opportunities for Gamco Global and Mfs Utilities

0.61

Correlation Coefficient

Gamco Global  Mfs Utilities

Poor diversification

The 3 months correlation between Gamco and Mfs is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Gamco Global and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities 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 The Gamco Global are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Gamco Global i.e., Gamco Global and Mfs Utilities go up and down completely randomly.

Pair Corralation between Gamco Global and Mfs Utilities

Assuming the 90 days horizon Gamco Global is expected to generate 1.85 times less return on investment than Mfs Utilities. But when comparing it to its historical volatility, The Gamco Global is 1.32 times less risky than Mfs Utilities. It trades about 0.2 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,379  in Mfs Utilities Fund on September 2, 2024 and sell it today you would earn a total of  116.00  from holding Mfs Utilities Fund or generate 4.88% return on investment over 90 days.

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

The Gamco Global  vs.  Mfs Utilities Fund

Gamco Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gamco Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Utilities

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Utilities Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Mfs Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco Global and Mfs Utilities

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

The idea behind The Gamco Global and Mfs Utilities Fund 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.