Correlation Between GAMCO Natural and Gabelli Global

Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and Gabelli 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 Gabelli 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 Gabelli Global Small, you can compare the effects of market volatilities on GAMCO Natural and Gabelli 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 Gabelli Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and Gabelli Global.

Diversification Opportunities for GAMCO Natural and Gabelli Global

0.63

Correlation Coefficient

GAMCO Natural  Gabelli Global

Poor diversification

The 3 months correlation between GAMCO and Gabelli is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Gabelli Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Small 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 Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Small has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Gabelli Global go up and down completely randomly.

Pair Corralation between GAMCO Natural and Gabelli Global

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 1.17 times more return on investment than Gabelli Global. However, GAMCO Natural is 1.17 times more volatile than Gabelli Global Small. It trades about 0.08 of its potential returns per unit of risk. Gabelli Global Small is currently generating about 0.02 per unit of risk. If you would invest  558.00  in GAMCO Natural Resources on November 19, 2024 and sell it today you would earn a total of  27.00  from holding GAMCO Natural Resources or generate 4.84% return on investment over 90 days.

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

GAMCO Natural Resources  vs.  Gabelli Global Small

GAMCO Natural Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GAMCO Natural is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gabelli Global Small

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Small are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gabelli Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GAMCO Natural and Gabelli Global

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

The idea behind GAMCO Natural Resources and Gabelli Global Small 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.