Correlation Between GAMCO Natural and Gabelli Utility

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

Diversification Opportunities for GAMCO Natural and Gabelli Utility

0.64

Correlation Coefficient

GAMCO Natural  Gabelli Utility

Poor diversification

The 3 months correlation between GAMCO and Gabelli is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed 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 Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Gabelli Utility go up and down completely randomly.

Pair Corralation between GAMCO Natural and Gabelli Utility

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 0.71 times more return on investment than Gabelli Utility. However, GAMCO Natural Resources is 1.4 times less risky than Gabelli Utility. It trades about 0.38 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.17 per unit of risk. If you would invest  519.00  in GAMCO Natural Resources on November 29, 2024 and sell it today you would earn a total of  63.00  from holding GAMCO Natural Resources or generate 12.14% 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 Utility Closed

GAMCO Natural Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 1 (%) 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 Utility Closed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively abnormal basic indicators, Gabelli Utility may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with GAMCO Natural and Gabelli Utility

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

The idea behind GAMCO Natural Resources and Gabelli Utility Closed 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.