Correlation Between GAMCO Global and Carters

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

By analyzing existing cross correlation between GAMCO Global Gold and Carters, you can compare the effects of market volatilities on GAMCO Global and Carters 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 Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Global and Carters.

Diversification Opportunities for GAMCO Global and Carters

0.79

Correlation Coefficient

GAMCO Global  Carters

Poor diversification

The 3 months correlation between GAMCO and Carters is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Gold are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of GAMCO Global i.e., GAMCO Global and Carters go up and down completely randomly.

Pair Corralation between GAMCO Global and Carters

Assuming the 90 days trading horizon GAMCO Global Gold is expected to under-perform the Carters. But the preferred stock apears to be less risky and, when comparing its historical volatility, GAMCO Global Gold is 1.62 times less risky than Carters. The preferred stock trades about -0.28 of its potential returns per unit of risk. The Carters is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,528  in Carters on September 25, 2024 and sell it today you would lose (46.00) from holding Carters or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GAMCO Global Gold  vs.  Carters

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with GAMCO Global and Carters

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

The idea behind GAMCO Global Gold and Carters 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.