Correlation Between GAMCO Natural and Putnam Master

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

Diversification Opportunities for GAMCO Natural and Putnam Master

0.47

Correlation Coefficient

GAMCO Natural  Putnam Master

Very weak diversification

The 3 months correlation between GAMCO and Putnam is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Putnam Master Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Master Interm 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 Putnam Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Master Interm has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Putnam Master go up and down completely randomly.

Pair Corralation between GAMCO Natural and Putnam Master

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 1.72 times more return on investment than Putnam Master. However, GAMCO Natural is 1.72 times more volatile than Putnam Master Intermediate. It trades about 0.03 of its potential returns per unit of risk. Putnam Master Intermediate is currently generating about -0.02 per unit of risk. If you would invest  576.00  in GAMCO Natural Resources on September 14, 2024 and sell it today you would earn a total of  11.00  from holding GAMCO Natural Resources or generate 1.91% 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.  Putnam Master Intermediate

GAMCO Natural Resources

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 2 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Putnam Master Interm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Master Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Putnam Master is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GAMCO Natural and Putnam Master

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

The idea behind GAMCO Natural Resources and Putnam Master Intermediate 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.