Correlation Between GAMCO Natural and Nuveen Pennsylvania

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

Diversification Opportunities for GAMCO Natural and Nuveen Pennsylvania

0.74

Correlation Coefficient

GAMCO Natural  Nuveen Pennsylvania

Poor diversification

The 3 months correlation between GAMCO and Nuveen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Nuveen Pennsylvania Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Pennsylvania 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 Nuveen Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Pennsylvania has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Nuveen Pennsylvania go up and down completely randomly.

Pair Corralation between GAMCO Natural and Nuveen Pennsylvania

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 1.27 times more return on investment than Nuveen Pennsylvania. However, GAMCO Natural is 1.27 times more volatile than Nuveen Pennsylvania Quality. It trades about 0.32 of its potential returns per unit of risk. Nuveen Pennsylvania Quality is currently generating about 0.06 per unit of risk. If you would invest  518.00  in GAMCO Natural Resources on December 27, 2024 and sell it today you would earn a total of  84.00  from holding GAMCO Natural Resources or generate 16.22% 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.  Nuveen Pennsylvania Quality

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 25 (%) 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.

Nuveen Pennsylvania

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Pennsylvania Quality are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Nuveen Pennsylvania is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GAMCO Natural and Nuveen Pennsylvania

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

The idea behind GAMCO Natural Resources and Nuveen Pennsylvania Quality 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.