Correlation Between GM and Gamco Global

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

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

Diversification Opportunities for GM and Gamco Global

-0.84

Correlation Coefficient

GM  Gamco Global

Pay attention - limited upside

The 3 months correlation between GM and Gamco is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gamco Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Opportunity and GM 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 General Motors are associated (or correlated) with Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Opportunity has no effect on the direction of GM i.e., GM and Gamco Global go up and down completely randomly.

Pair Corralation between GM and Gamco Global

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.3 times more return on investment than Gamco Global. However, GM is 3.3 times more volatile than Gamco Global Opportunity. It trades about 0.09 of its potential returns per unit of risk. Gamco Global Opportunity is currently generating about -0.14 per unit of risk. If you would invest  4,620  in General Motors on September 13, 2024 and sell it today you would earn a total of  610.00  from holding General Motors or generate 13.2% return on investment over 90 days.

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

General Motors  vs.  Gamco Global Opportunity

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Gamco Global Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamco Global Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with GM and Gamco Global

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

The idea behind General Motors and Gamco Global Opportunity 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.