Correlation Between GAMCO Natural and GAMCO Global

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

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

Diversification Opportunities for GAMCO Natural and GAMCO Global

0.94

Correlation Coefficient

GAMCO Natural  GAMCO Global

Almost no diversification

The 3 months correlation between GAMCO and GAMCO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold and GAMCO Natural 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 Natural Resources 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 Gold has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and GAMCO Global go up and down completely randomly.

Pair Corralation between GAMCO Natural and GAMCO Global

Assuming the 90 days trading horizon GAMCO Natural Resources is expected to generate 0.61 times more return on investment than GAMCO Global. However, GAMCO Natural Resources is 1.65 times less risky than GAMCO Global. It trades about -0.29 of its potential returns per unit of risk. GAMCO Global Gold is currently generating about -0.22 per unit of risk. If you would invest  2,313  in GAMCO Natural Resources on September 23, 2024 and sell it today you would lose (169.00) from holding GAMCO Natural Resources or give up 7.31% of portfolio value over 90 days.

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

GAMCO Natural Resources  vs.  GAMCO Global Gold

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with GAMCO Natural and GAMCO Global

The main advantage of trading using opposite GAMCO Natural and GAMCO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMCO Natural 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 GAMCO Natural Resources and GAMCO Global Gold 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.