Correlation Between GAMCO Natural and BlackRock Core

Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and BlackRock 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 Natural and BlackRock Core 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 BlackRock Core Bond, you can compare the effects of market volatilities on GAMCO Natural and BlackRock 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 Natural with a short position of BlackRock Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and BlackRock Core.

Diversification Opportunities for GAMCO Natural and BlackRock Core

0.57

Correlation Coefficient

GAMCO Natural  BlackRock Core

Very weak diversification

The 3 months correlation between GAMCO and BlackRock is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and BlackRock Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Core Bond 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 BlackRock Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Core Bond has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and BlackRock Core go up and down completely randomly.

Pair Corralation between GAMCO Natural and BlackRock Core

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 1.23 times more return on investment than BlackRock Core. However, GAMCO Natural is 1.23 times more volatile than BlackRock Core Bond. It trades about 0.25 of its potential returns per unit of risk. BlackRock Core Bond is currently generating about 0.07 per unit of risk. If you would invest  526.00  in GAMCO Natural Resources on December 22, 2024 and sell it today you would earn a total of  68.00  from holding GAMCO Natural Resources or generate 12.93% return on investment over 90 days.

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

GAMCO Natural Resources  vs.  BlackRock Core Bond

GAMCO Natural Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, GAMCO Natural unveiled solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Core Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Core Bond are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GAMCO Natural and BlackRock Core

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

The idea behind GAMCO Natural Resources and BlackRock Core Bond 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.